Rate hike expectations, C$ rise as Poloz reiterates cuts have done their job
OTTAWA — With the Bank of Canada nearing its next policy decision, expectations of an interest-rate hike increased Wednesday after governor Stephen Poloz reiterated that his 2015 cuts appeared to have done their job.
Poloz made the comments in an interview broadcast on business news channel CNBC. He noted the Canadian economy enjoyed “surprisingly” strong growth in the first three months of 2017 and he expected the pace to stay above potential.
The Canadian dollar climbed to a four-month high of 76.44 cents US after Poloz’s comments, which fed speculation about a rate increase as early as its next scheduled announcement in two weeks. The boost lifted the loonie from an average price of 75.83 cents US on Tuesday.
If the central bank increases its key rate, the big Canadian banks are expected to raise their prime rates, driving up the cost of variable rate mortgages, other loans and lines of credit tied to the benchmark rate.