The Globe and Mail reports in its Thursday, July 11, edition that the Bank of Canada and the United States Federal Reserve have taken different paths over the past year and a half, with the Fed raising rates more aggressively than its Canadian counterpart.
The Globe's Ian McGugan writes that interest rates are likely to move closer together over the coming months as U.S. growth slows and Canada picks up speed. The BOC's monetary policy statement on Wednesday warned that trade conflicts are taking their toll on global trade. Fed chairman Jerome Powell made much the same point in his testimony to Congress, also on Wednesday.
To be sure, the near-simultaneous statements also pointed to the near-term differences between the Canadian and U.S. perspectives. Mr. Powell's remarks underlined the uncertainties facing the U.S. economy. His testimony strongly supported the case for the quarter-percentage-point cut that markets are expecting at the end of July. In contrast, the BOC left its key rate unchanged and appeared in no rush to cut rates. It predicted a rebound in Canadian growth, from 1.3 per cent this year to 1.9 per cent in 2020 and 2 per cent in 2021 on the back of strong consumer spending.
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