USD/CAD to 1.03 as BoC looks for Sustained Growth

Fidelity Investments says the Bank of Canada may raise interest rates after the Federal Reserve does as economic growth in the U.S. outstrips that of its northern neighbor.

Slower growth has prompted Bank of Canada Governor Stephen Poloz to say in policy statements that higher rates depend on signs of sustained growth, even as he retains a policy-statement warning added a year ago by his predecessor that the bank’s next move will be to raise rates. In the U.S., accelerating growth has caused Fed Chairman Ben S. Bernanke to signal he’ll probably begin reducing monetary stimulus this year, while policy makers’ forecasts indicate the key rate won’t be raised until 2015.

“With sluggish growth in Canada, I would not expect the Bank of Canada to be hiking rates through 2014,” Brian Miron, a portfolio manager in Merrimack, New Hampshire, at the fixed-income unit of Fidelity Investments, said yesterday at an investor round-table at the Bloomberg Canadian Fixed-Income Conference in New York. Fidelity managed $1.77 trillion as of June 30. “You can make the argument that with fundamentals being softer in Canada, the Fed might be the first to hike. You can see that case being made.”


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