Bank of Canada won't act until it sees government budget

Author: Adam Button | Category: Central Banks

Bank of Canada decision due on Wednesday

The main event for Canadian dollar traders this week is the Bank of Canada interest rate decision on Wednesday. The Globe & Mail takes a closer look today and writes that Poloz is likely to stay on the sidelines until the federal government delivers its March budget.

The spending plans will be the first from the Liberal government and are expected to include heavy spending in order to counteract the commodity collapse.

None of that is any surprise, the BOC has said it wants to see the budget before updating its forecasts.

What has been a surprise is the resilience of the economy.

"The reality, one the Bank of Canada is well aware of, is that while energy, a relatively small part of the Canadian economy, has performed alarmingly poorly, the majority of the economy is doing just fine," the Globe's David Parkinson writes.

He goes on to highlight that some of the outperformance is due to the soft Canadian dollar and that the BOC will want to choose its words carefully to avoid stoking a continued CAD rebound.

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