The Bank of Canada announced on Wednesday that it will continue to cut interest rates by 0.25%, while lowering its GDP growth forecast for this year and next. After the news was announced, USD/CAD soared by more than 100 points, setting a new high in the past six years. As an energy exporter, Canada has suffered a severe devaluation this year due to the drop in crude oil prices. The huge competitive pressure in the international crude oil market has also greatly affected pillar industries such as domestic crude oil, and the unemployment rate has soared, which led the central bank to cut interest rates at the beginning of the year.
In recent months, the inflation rate of consumer price index (CPI) in Canada is about 1%, which reflects that the price of energy products consumed has decreased compared with the same period last year. The core inflation rate is close to 2%, and the anti-inflation pressure brought by economic relaxation is offset by the weakening of the Canadian dollar and the temporary influence of some special sector factors. Regardless of these short-term factors, the Bank of Canada judged the basic inflation trend as 1.5% to 1.7%.
On Wednesday, the Bank of Canada announced that it would cut its benchmark interest rate by 25 basis points to 0.5%, compared with 0.75%. Earlier, investment banks including BNP Paribas expected the Bank of Canada to cut interest rates again. At the same time, the Bank of Canada announced that it would cut its GDP forecast from 1.8% to -0.5% in the second quarter and from 2.8% to 1.5% in the third quarter. The Bank of Canada said that it expects the economy to resume growth in the third quarter, and the growth in the fourth quarter began to exceed the potential level. Canada's 20 15 growth forecast is 1. 1%, which is lower than that expected in April.
The central bank said that "the 20 15 GDP growth forecast was lowered because" the investment plans of enterprises in the energy industry were further lowered, and the exports of non-energy commodities and non-bulk commodities were weaker than expected. "In addition, the central bank lowered its potential inflation forecast from 1.7% to 1.5%. According to the central bank, short-term inflation has the risk of downward intensification, and it is expected that inflation will rise to 2% in the first half of 20 17.
After the announcement of the Bank of Canada's interest rate cut, USD/CAD soared by more than 100 points in the short term, reaching a maximum of 1.4438+0, setting a new high since 2009.