Bank of Canada Policy Preview

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GVI Dollar Outlook

CANADA

GVI Bank of Canada Policy Meeting Preview

Decision: July 21, 2009 at 13:00 GMT.

BOC Overnight Target Rate: 0.25%

Expected Decision: unchanged.

The Bank of Canada quantitative ease is in place.

BANK OF CANADA Policy Objective: The Bank of Canada aims to keep inflation at the 2 per cent target, the midpoint of the 1 to 3 per cent inflation-control target range. This target is expressed in terms of total CPI inflation, but the Bank uses a measure of core inflation as an operational guide. Core inflation provides a better measure of the underlying trend of inflation and tends to be a better predictor of future changes in the total CPI.

cacpi

The chart above shows year/year CPI-X (core CPI) and the target of 2% for this price index.

The chart above shows the current three month Banker Acceptance rate, the current BOC overnight rate target and where the futures markets are currently trading three month rates for the specified periods in the future. The chart also includes comparisons of where these futures rates were trading most recently, a week ago and four weeks ago. The chart provides a view on where the markets feel Canadian interest rates are headed.

The chart above shows the Canadian overnight rate target, three month Bankers Acceptance, and two- and ten-year bond yields over the past twelve months.

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