Bank of Canada cuts key lending rate, while U.S. Federal Reserve holds steady, potentially increasing Canadian dollar volatility.

The Bank of Canada and U.S. Federal Reserve are anticipated to diverge in their monetary policies, which could lead to increased volatility for the Canadian dollar. The Bank of Canada has cut its key lending rate due to lower inflation and aims to support the Canadian economy, while the U.S. Federal Reserve is expected to hold its key interest rate steady amidst a more resilient U.S. economy. The extent of divergence between the two countries' interest rates will depend on the U.S. economy's performance and the Bank of Canada's future decisions.

June 12, 2024
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