THE LOONIE COULD WEAKEN ON STEADY INTEREST RATES

Mar 06, 2013

By Scott Walker

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The struggling Canadian dollar could sink further today.

The Bank of Canada will issue its regular policy statement on interest rates. It’s expected to leave the trend-setting rate at one per cent. But analysts are saying they expect the central bank to soften its statements about when rates might begin to rise again.

Derek Burleton is a senior economist at TD Bank. He says a delay in higher rates could affect the loonie, and that would help the central bank increase inflation by making imported goods more expensive. Burleton says inflation is too low for a health economy, and a lower dollar would push prices up.

The bank has kept the overnight rate at one per cent for two-and-a-half years. The betting now is that it might stay there until some time late next year.

 

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