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Bank of Canada Governor Macklem says not close to limit of divergence with Fed

Bank of Canada Governor Macklem:

reiterates that there is a limit to how far the Bank can diverge on rates from the Fed – says not close to that limit

The Bank of Canada cut rates at its previous meeting, beginning the process of ‘divergence’ with the Fed:

Bank of Canada lowers rates to 4.75% from 5.0%. Full statement from the Bank of Canada

The FOMC today held its rate steady, as was widely expected. The statement indicated they may well have drifted closer to favouring a cut. But the SEP (dot plot) showed most on the Committee favoured one or no rate cuts this year, from three at the previous update. Talk about muddying the waters. FWIW I’m thinking the prospect of a further divergence between the BoC (lower) and Fed (steady) just grew greater.

This article was written by Eamonn Sheridan at www.forexlive.com.

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