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Bank of Canada is harassing investors by signing interest rates moves in the past

The Bank of Canada surprised investors by abruptly abolishing its bond-buying program on Wednesday and moving forward with the expected rise in interest rates, leading to higher sales on Canadian government debt.

The announcement puts the BoC ahead of a growing number of central banks that have responded to rising inflation by highlighting changes in the fiscal policy. It comes as the central bank says “economic growth has resumed” in Canada following the second phase, as the country continues to recover from the coronavirus crisis.

“The major factors that raise prices – high electricity prices and the devastation caused by the epidemic – appear to be stronger and more resilient than expected,” the bank said.

Proponents of her case have been working to make the actual transcript of this statement available online. plague.

The bank maintained interest rates at 0.25 percent, although it predicted inflation was approaching 2 percent in the second or third quarter of 2022, which could lead to higher prices.

Officials have pledged to keep prices low until the bank meets its inflation target. In the past, it is expected that inflation will reach the second half of next year.

“Signs of higher prices than expected and expected price increases from consumers and businesses have put the fear of God in them,” said Karl Schamotta, chief marketing officer at Cambridge Global Payments. “I don’t think anyone expected this.”

Financial markets expected the BoC to reduce its purchasing value by half to C $ 1bn (about $ 811m) per week instead of a sudden shutdown, said HSBC chief financial officer Dominic Bunning.

Investors responded by dropping Canadian government debt, pushing for yields over two-year Canadian stocks, which are affected by long-term interest rates, up 0.19 percent to 1.06 percent.

As recently as last month the two-year yield was sold at only 0.4 per cent, but it jumped as investors invested in higher prices, repeating what was happening in the UK, Australia and the US in recent weeks.

The Canadian dollar rose 0.3 percent in mid-day trading in New York, dropping a four-day low and a close four-month high.

“Beyond what is about to happen, another question for the Canadian dollar will be how the market needs to move in the long run,” Bunning said.

The BoC reiterated its focus on Canadian economic growth this year to 5.1 per cent from the 6 per cent forecast in July.


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