Invesco Canada blog

Insights, commentary and investing expertise

Interest-rate outlook: Fed hikes on the horizon?

Yields on Canadian government bonds have hovered in a range this year as the global yield sell-off has paused. The yield curve remains in a steepening trend as the Bank of Canada has attempted to keep the possibility of a rate cut on the table, although a recent string of positive employment surprises has made that possibility less likely. Canadian government bond yields are likely to remain range-bound in the near term until more certainty emerges around global economic prospects.

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Interest-rate outlook: The aftermath of Trump’s win

Canadian government yields have remained under the same upward pressure felt globally in the aftermath of the U.S. presidential election which boosted expectations of higher growth and inflation fueled by U.S. fiscal stimulus and tax cuts. The Bank of Canada meeting in January recognized that Canada’s economy has shown some improvement, but emphasized there was more work needed to reduce excess capacity as inflation remains very low.

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BoC holds rates amid Trump policy uncertainty

The Bank of Canada (BoC) announced today that the overnight policy rate remained unchanged at 0.5%. There wasn’t much suspense heading into today’s monetary policy meeting as economic data had shown at least some improvement recently and a rate cut did not appear warranted.

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The Fed finally hikes rates – what does it mean?

The U.S. Federal Reserve (Fed) hiked rates 0.25% today, for only the second time in this cycle, to a range of 0.5% – 0.75%. The statement that accompanied the meeting made note of a strengthening of the labour market, moderate growth and improving inflation. Additionally, the Fed views risks to the economy as “roughly balanced”.

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BoC holds rate, but downgrades growth outlook

The Bank of Canada (BoC) left the overnight lending rate unchanged at 0.5% Wednesday. Generally the tone of the meeting was dovish as Bank Governor Stephen Poloz acknowledged that the Governing Council actively discussed the possibility of adding additional monetary stimulus at the meeting as economic slack continues to exert downward pressure on inflation. In spite of that acknowledgement, the Bank did not indicate that a future rate cut was imminent.

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Fed holds rate, signals likely December hike

Today’s much-awaited Federal Reserve (Fed) meeting and press conference came and went with what I’d describe as few surprises. The Fed left the federal funds rate unchanged (target range of 0.25% – 0.50%) but saw three Federal Reserve Bank presidents (Esther L. George, Loretta Mester and Eric Rosengren) cast dissenting votes in favour of a hike.

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