Bank of Canada Overnight Rate
Event Date: Wednesday, January 24, 2024
Event Time: 14:45 CET
Updated Monday, January 22, 2024
The likelihood of the Bank of Canada cutting interest rates in the near future has been inching lower after the economic recovery of recent months. So far, the BOC has held the benchmark interest rate steady at 0.25%, as employment rose at a steady pace and inflation held around the bank’s target of 2%. As coronavirus spread around the globe and the economy has stagnated, the BOC cut rates three times back then, bringing them to 0.25%. The FED made a hawkish reversal in the last meeting as the US economy booms, while Canada is coming out of the prolonged restrictions with the economy rebounding strongly too. So, the BOC was expected to increase interest rates from 1.50% to 2.00% but delivered a 100bps hike, taking them to 2.50%. They have been raising rates since then, taking them to 5% where they have stalled. Please follow us for live coverage of this event by experienced analysts in 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.