If the Bank of Canada isn’t careful, it’s going to develop a reputation for caring more about the exchange rate than it says it does.
The headlines when the central bank last updated its policy on Oct. 24 focused on the explicit promise to leave the benchmark interest rate near zero until 2023, and the decision to tweak its bond-buying program. “As the economy recuperates, it will require extraordinary monetary policy support,” the statement said.
But policy-makers also commented on something they typically ignore, observing that “despite low oil prices, the Canadian dollar has appreciated since July, largely reflecting a broad-based depreciation of the U.S. dollar.”
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