Bank of Canada Headquarters
Bank of Canada Overnight Rate
BOC Not Expected to Act as Canadian Economy Has Shown Signs of Improvement
Starts Wednesday, September 4, 2019 at 14:00
Updated Wednesday, September 4, 2019
The Bank of Canada (BOC) increased interest rates in May this year from 1.25% to 1.50%. This was expected, but it supported the Canadian Dollar and gave it a push higher nonetheless. In July and September, the BOC kept interest rates unchanged, although it increased interest rates again in October to 1.75% from 1.50%. The BOC kept rates unchanged since then and it is expected to keep rates on hold again today, but the statement will be interesting to see because they shifted from slightly hawkish to dovish in the last few meetings. But the Canadian economy has shown signs of improvement in the lat two months, so it will be interesting to see where the BOC stands now and what expectations they have for the near-term future. Please follow us for live coverage of this event by experienced analysts on our Economic Calendar section.
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About Bank of Canada Overnight Rate
Also known as the interest rates or key interest rate, this is the main interest rate used by the Bank of Canada (BOC) o refinance its operations, providing liquidity to the secondary level of the banking system. The rate is set by the governing council members at the BOC. The BOC generally decides to increase interest rates when the economy is performing well and inflation is increasing. This means that the borrowing costs of banks would increase causing the availability and liquidity to fall. This is supposed to strengthen the CAD. However, because the interest rate decisions are usually priced in by the market, the effect they have on the currency diminishes. Instead, the accompanying statement has a greater impact on the CAD.