{"id":6482,"date":"2021-01-20T22:15:30","date_gmt":"2021-01-20T22:15:30","guid":{"rendered":"https:\/\/www.pantheregroup.com\/2021\/01\/20\/bank-of-canada-warns-surging-loonie-could-pose-risk-to-economic-outlook\/"},"modified":"2021-01-20T22:15:30","modified_gmt":"2021-01-20T22:15:30","slug":"bank-of-canada-warns-surging-loonie-could-pose-risk-to-economic-outlook","status":"publish","type":"post","link":"https:\/\/www.pantheregroup.com\/2021\/01\/20\/bank-of-canada-warns-surging-loonie-could-pose-risk-to-economic-outlook\/","title":{"rendered":"Bank of Canada warns surging loonie could pose risk to economic outlook"},"content":{"rendered":"
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\u201cOn the other hand, what we\u2019re seeing now is most of the appreciation in the Canadian dollar is coming because of a broad-based depreciation of the U.S. dollar,\u201d Macklem told reporters during a press conference. \u201cThat\u2019s not a made-in-Canada development. So, the exchange rate is becoming a factor in its own right in our projection.\u201d<\/p>\n

Macklem\u2019s comments followed the Bank of Canada\u2019s decision<\/a> to leave its key interest rate unchanged at 0.25 per cent. The loonie rose from about 78.7 cents US pre-decision to more than 79 cents US shortly after.<\/p>\n

In making its announcement, the central bank said the world is still rife with uncertainty, and that the economic outlook continues to hinge on the coronavirus pandemic and vaccine rollouts. A stronger dollar could throw another wrench into that economic outlook.<\/p>\n

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Bank of Canada Governor Tiff Macklem.<\/span> Photo by Blair Gable\/Reuters files<\/span><\/figcaption><\/figure>\n

\u201cAppreciation of the Canadian dollar creates direct downward pressure on inflation by lowering the prices of imports,\u201d Wednesday\u2019s monetary policy report said. \u201cFurther appreciation of the Canadian dollar could slow output growth by reducing the competitiveness of Canadian exports and import-competing production. Slower output growth would also imply more disinflationary pressures.\u201d<\/p>\n

Inflation \u2014 a measure of how much the prices for goods and services are increasing \u2014 is key to the Bank of Canada\u2019s monetary policy decisions, namely the setting of its key interest rate. The bank\u2019s target for inflation is a two per cent year-over-year increase in the consumer price index (CPI), which measures the change in cost of a basket of products.<\/p>\n<\/div>\n\n
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Article content continued \u201cOn the other hand, what we\u2019re seeing now is most of the appreciation in the Canadian dollar is coming because of a broad-based depreciation of the U.S….<\/p>\n","protected":false},"author":2,"featured_media":6483,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[23],"tags":[],"class_list":["post-6482","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business-news"],"_links":{"self":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts\/6482","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/comments?post=6482"}],"version-history":[{"count":0,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts\/6482\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/media\/6483"}],"wp:attachment":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/media?parent=6482"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/categories?post=6482"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/tags?post=6482"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}