Connect with us

Hi, what are you looking for?

Forex

Higher US Fed rates ‘not a major concern’ for C$, BoC’s Macklem says

By Ismail Shakil

OTTAWA (Reuters) -The impact of higher U.S. interest rates on the Canadian dollar is not a “major concern,” and the Bank of Canada (BoC) would have to react only if there is a substantial depreciation of the , Governor Tiff Macklem said on Thursday.

Macklem, appearing before a Canadian Senate committee, was asked if the Federal Reserve’s continuing to raise rates could lead to the weakening of the Canadian dollar and hinder the BoC’s plan to tame high inflation.

Typically, higher rates in the United States than in Canada would strengthen the greenback over the loonie.

“That is not a major concern. We have an independent monetary policy, we have a flexible exchange rate,” Macklem told a Senate committee. In a floating exchange rate regime, a currency’s level is determined by supply and demand in the market.

“It’s something we’ll have to take into account if the (Canadian) dollar were to depreciate considerably,” Macklem said.

The Canadian dollar has weakened about 11% against its U.S. counterpart since June 2021, when inflation started to pick up, though year-to-date it is up 0.6% against greenback.

The BoC raised rates at a record pace over the past year to cool inflation, and then became the first major central bank to pause monetary tightening. It has left its key policy rate at a 15-year high of 4.50% at its last two policy-setting meetings.

The U.S. Federal Reserve, also fighting high inflation, has continued raising rates and is expected to deliver another 25-basis-point hike in May to take its key policy rate to the 5.00%-5.25% range, according to Reuters’ poll of economists.

“The Canadian dollar, it’s been reasonably stable … and largely that reflects the fact that the U.S. has also been raising interest rates very rapidly,” Macklem said.

“I don’t see a big problem if the U.S. is going a little higher than us. I think that’s kind of already built into the market,” he said.

 

Read the full article here

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like

News

This article was written by Follow Long-only investment, evaluating companies from an operational, buy-and-hold perspective.Quipus Capital does not focus on market-driven dynamics and future...

News

America’s Car-Mart, Inc. (NASDAQ:CRMT) Q2 2025 Earnings Conference Call December 5, 2024 9:00 AM ET Company Participants Vickie Judy – CFODoug Campbell – President...

News

Genesco Inc. (NYSE:GCO) Q3 2025 Earnings Conference Call December 6, 2024 8:30 AM ET Company Participants Darryl MacQuarrie – Senior Director of FP&AMimi Vaughn...