The Bank of Canada raised its benchmark interest rate by 50bps to 1.0 % as widely expected. It is the second consecutive rate hike, pushing borrowing costs to the highest in 2 years when the coronavirus pandemic started. The central bank also announced it will end reinvestment and will begin quantitative tightening effective April 25th. Maturing Government of Canada bonds on the Bank’s balance sheet will no longer be replaced and, as a result, the size of the balance sheet will decline over time. Investors will focus now on BoC Governor comments at the press conference regarding the economic outlook, inflation and fiscal policy.
USDCAD initially fell after today's BoC rate decision, however buyers quickly regained control and pair is testing resistance at 1.2660. Source:xStation5
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