The Canadian dollar fell as Bank of Canada Governor Stephen Poloz said the nation’s economy has significant slack and inflation remains muted, pushing back the potential for an interest-rate increase.
The currency weakened against the majority of its 16 most-traded peers as policy makers kept Canada’s benchmark rate on overnight loans at 1 percent for the 23rd consecutive announcement, as forecast by all 20 economists in a Bloomberg News survey. Poloz tied higher rates to barometers of economic health and said tighter policy can be expected “over time,” retaining the bias that has been included in every policy statement since April 17, 2012. Federal Reserve Chairman Ben S. Bernanke said curtailing the U.S. central bank’s asset purchases remains linked to indications of economic improvement.
Poloz “gave you a Fed-esque type statement that essentially said ’we’re data dependent,’” said Adrian Miller, the director of fixed-income strategies at GMP Securities LLC, by phone from New York. “For the Canadian market, it injects a higher level of uncertainty and volatility.”