Every week here at theCurrent we bring you the world’s biggest business stories. This week: the loonie’s recent comeback, inflation is down in Canada, the Fed holds rates and so does England.
Loonie takes flight
The Canadian dollar continued to climb this week ending over 77 cents US on Thursday, up from under 73 cents USD less than a month ago. Unsurprisingly the loonie’s recent comeback was helped in part by stronger oil prices which came close to matching yearly highs, despite West Texas Intermediate falling 6 cents USD to US$40.03 and Brent Crude down 2 cents USD to US$41.53. (Source: http://www.cbc.ca/news/business/canadian-dollar-oil-remain-near-highs-for-the-year-1.3497721)
Inflation down in Canada
Inflation in Canada rose 1.4% in February, down from 2% in January according to Statistics Canada. Gas prices have fallen 13.1% since the same time last year, dragging down the inflation rate which would have otherwise remained around 1.9%. Food prices have remained high however, at 3.9% more expensive than last year. (Source: http://www.640toronto.com/syn/104/82666/falling-gas-prices-push-canadas-inflation-rate-lower-in-february)
Bank of England Rock bottom Rates
The Bank of England’s nine members voted unanimously to hold interest rates at 0.5%, continuing the record low level that has been maintained for seven years. This is despite concerns regarding Britain’s uncertain future with a looming EU referendum and concerns about the possibility of slowing British growth. Interest rates are, of course, a crucial factor in determining exchange rates. (Source: http://www.bbc.co.uk/news/business-35831827).
Fed Holds Rates
America’s central bank, the Federal Reserve, has declined to raise interest rates. Janet Yellen, Fed Chair, argued that the decision was ‘prudent’. Despite noting that the US had increased spending and decreased unemployment, some concerns over the global economy convinced the Fed to keep rates low in order to encourage spending to keep the economy recovering. The Fed has maintained that it will continue to hike interest rates but those plans seem to have been postponed, causing markets to rally. (Source: http://www.npr.org/sections/thetwo-way/2016/03/16/470698819/federal-reserve-decides-to-keep-interest-rates-low-a-while-longer)
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