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Bank of Canada Governor hints at July interest rate hike — Business Report

In prepared remarks of a speech, deputy governor Lynn Patterson says the central bank relies on the insight it gathers from contacts such as fellow policy-makers, market participants and company representatives as a critically important complement to its models and data.”But we’re just approaching a new interest rate decision so I don’t want to prejudge”, he said in the interview.”It does look as though those cuts have done their job”, said Poloz, who was in Portugal on Wednesday to participate in a forum hosted by the European Central Bank.Poloz credited the two rate cuts introduced by the bank in 2015 for helping the economy counteract the effects of the oil-price slump, which began in late 2014. “But certainly we need to be at least considering that whole situation now that the capacity, excess capacity, is being used up steadily”.The overnight rate, which now sits at 0.5 per cent, also influences the mortgage market, but its most immediate effects are felt on variable mortgage rates, which aren’t static.The Canadian dollar gained three-quarters of a cent and hit its highest level in four months on Wednesday after Canada’s central bank head hinted in an interview that rate hikes could be coming sooner rather than later.Poloz said every major region is gathering momentum and the synchronized growth phase is a positive, though everyone is in a different phase of the business cycle.Meanwhile, in the USA the Senate’s decision to delay a vote on a health-care bill to repeal and replace Obamacare weighed on dollar sentiment, as investors questioned whether the delay would derail President Trump’s plan to introduce pro-growth economic measures such as tax-reform. And then a little bit behind of course Europe. West Texas Intermediate slid to just above $44 U.S. a barrel on Wednesday on continuing oversupply issues. “Well you know that’s good for collaboration”, he said. “And so let’s keep our fingers crossed on that, that it’s not a long, drawn-out process because of this, that it is a headwind”, Poloz told CNBC. So, if they do anything to push the oil prices higher, this could support the CAD and this, along with hopes of a rate hike from Canada, could mean a total rout as far as the USDCAD pair is concerned.