BOC: Holds Key Rate at 2.75%, Signals Potential Cut Amid Tariff Threat
Jun-04 13:45
- Bank of Canada kept benchmark interest rate 2.75% Wednesday, in line with majority of economist expectations.
- Second consecutive decision to hold signaled potential cut if economy weakens and inflation contained.
- "On balance, members thought there could be a need for a reduction in the policy rate if the economy weakens in the face of continued US tariffs and uncertainty, and cost pressures on inflation are contained," Governor Macklem said.
- "At this decision there was a clear consensus to hold policy unchanged as we gain more information."
- Similar to previous statement BOC will continue monitoring timing and strength of downward pressure on inflation from a weaker economy and upward pressure from higher costs. BOC removed reference from prior statement that it could "act decisively" if the economy clearly moved in one direction.
- BOC says core inflation higher than it had expected, possibly because of tariffs.
- "The economy is expected to be considerably weaker in the second quarter, with the strength in exports and inventories reversing and final domestic demand remaining subdued," BOC said.
- Recent surveys show consumers expecting higher prices and businesses intend to pass tariff costs to their customers, BOC also said.
- "Governing Council is proceeding carefully, with particular attention to the risks. This means we are being less forward-looking than usual."
- The central bank will pay close attention to risks and uncertainties: "extent to which higher US tariffs reduce demand for Canadian exports; how much this spills over into business investment, employment and household spending; how much and how quickly cost increases are passed on to consumer prices; and how inflation expectations evolve."
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
MNI EXCLUSIVE: MNI interviews former Atlanta Fed president on monetary policy
May-05 13:40
MNI interviews former Atlanta Fed president on monetary policy -- On MNI Policy MainWire now, for more details please contact sales@marketnews.com
EQUITY TECHS: E-MINI S&P: (M5) Clears The 50-Day EMA
May-05 13:33
- RES 4: 5865.42 200-dma
- RES 3: 5837.25 High Mar 25 and a bull trigger
- RES 2: 5773.25 High Apr 2
- RES 1: 5724.75 High May 2
- PRICE: 5664.75 @ 14:22 BST May 5
- SUP 1: 5511.99 20-day EMA
- SUP 2: 5355.25/5127.25 Low Apr 24 / 21 and a key support
- SUP 3: 4996.43 76.4% retracement of the Apr 7 - 10 bounce
- SUP 4: 4832.00 Low Apr 7 and the bear trigger
The latest recovery in the e-mini S&P reinforces current bullish conditions.The contract has traded through the 50-day EMA, at 5620.87. A continuation of the bull phase would expose 5837.25 next, the Mar 25 high and a bull trigger. It is still possible that the entire rally since Apr 7 is a correction. A reversal lower would signal the end of this corrective phase and expose initially, support at 5127.25, the Apr 21 low.
JPY: The Yen is now the best performer in G10
May-05 13:19
- Close to 150 pips range for the USDJPY, the Yen has taken over the AUD as the best performer in G10 against the Greenback.
- The cross has fully cleared Friday's low that was situated at 143.73, and the next support will now be seen at 142.88, last Thursday's low.
