Flash: BoC to hike H2 2014 - Nomura

FXstreet.com (Barcelona) - As expected, the Bank of Canada (BoC) left its target rate at 1.00%, with the Central Bank revisiting its forward guidance, saying that "As long as there is significant slack in the Canadian economy, the inflation outlook remains muted, and imbalances in the household sector continue to evolve constructively, the considerable monetary policy stimulus currently in place will remain appropriate. Over time, as the normalization of these conditions unfolds, a gradual normalization of policy interest rates can also be expected, consistent with achieving the 2 per cent inflation target‟.

According to Nomura Economist Charles St-Arnaud: "Overall, the communiqué shows that the BoC view of the economy has little changed since the May meeting, as expected since we believe that the arrival of Mr. Poloz as Governor is unlikely to materially change the economic thinking within the BoC. However, it seems that is arrival coincides with a desire to provide more clarity regarding the forward guidance, despite the risk of confusion it could bring. We maintain our view that the BoC will likely remain on
hold until the second half of 2014, when we expect the BoC to hike."