Canada Disappoints, Keeps Rates Unchanged As Oil Patch Burns
by Tyler Durden
ZeroHedge.com
01/20/2016
On Tuesday in “Canada Set To Unleash Negative Rates As Oil Patch Dies, Depression Deepens,” we outlined the dilemma facing Stephen Poloz and the BOC.
If the central bank cuts rates and drives the loonie lower, Poloz may be able to keep the CAD price of WCS above the marginal cost of production and thus avoid shut-ins that would cost the Canadian economy still more oil patch jobs.
However, further loonie weakness risks triggering a backlash from Canada’s beleaguered consumers who may scale back spending if their purchasing power is further eroded (i.e. if cucumbers continue their relentless push towards $10).
In short, the BOC is damned if they do and damned if they don’t, and going into Wednesday, the rate decision was a coin toss.
Well, Poloz has spoken and the Bank of Canada has decided to save its dry poweder for another day. The benchmark rate remains on hold at 0.50% even as the central bank cuts its GDP forecast.
BANK OF CANADA MAINTAINS BENCHMARK INTEREST RATE AT 0.5%
BANK OF CANADA CUTS 2016 GDP FORECAST TO 1.4% FROM 2%
ECONOMY TO RETURN TO POTENTIAL BY ABOUT END OF 2017: BOC
BOC: `CURRENT STANCE OF MONETARY POLICY IS APPROPRIATE’
The Rest…HERE
