The Canadian dollar lost the most since June after the Bank of Canada dropped language about the need for future interest-rate increases that has been in place for more than a year, citing greater slack in the economy.
The currency fell against the majority of its 16 most-traded peers as Governor Stephen Poloz maintained the benchmark rate on overnight loans between commercial banks at 1 percent for the 25th consecutive meeting, as forecast by all 23 economists in a Bloomberg News survey. Inflation (CACPI) will remain less than the 2 percent target until the end of 2015, two quarters longer than forecast in July, with the risks of further weakness taking on “increasing importance,” the bank said.
“We’ll be lucky to see dollar/CAD stick to current levels in a three to six month time frame,” said Geoffrey Yu, a senior foreign-exchange strategist at UBS AG, by phone from London. “Unless data begins to register blowout numbers, like 3 percent inflation for three straight months, it’s really hard to see Bank of Canada changing their tack anytime soon.”