Central Banks
Fed’s Uncertain Path Creates Bind for Bank of Canada’s Macklem
- Divergence between US, Canada rates creates risk for loonie
- Economists say rates can diverge by maximum of 50 to 100 bps
US Federal Reserve Chair Jerome Powell and Bank of Canada Governor Tiff Macklem during a fireside chat at the Wilson Center in Washington on Tuesday.
Photographer: Samuel Corum/BloombergThis article is for subscribers only.
The Bank of Canada is getting closer to cutting interest rates, but there are limits to how far and how fast it can move without getting a clearer sign from the Federal Reserve.
Governor Tiff Macklem said last week officials are mulling when to cut the bank’s benchmark overnight rate from 5%, and he kept the door open to easing as early as June. With core inflation decelerating, markets are putting the odds of a cut at the next meeting at about two-thirds. A cut in July is fully priced.