No Surprises from Bank of Canada's announcement — BUSINESS REPORT

No Surprises from Bank of Canada's announcement — BUSINESS REPORT

No Surprises from Bank of Canada's announcement — BUSINESS REPORT

The Bank of Canada (BOC), which cut its rate twice past year by a total of 50 basis points, added the risks to its inflation profile had "tilted somewhat to the downside" since its July forecast.

Financial vulnerabilities still exist, however, with household imbalances continuing to worry the Central Bank.

"Interestingly, despite providing a laundry list of reasons to expect healthy growth in the second half of the year, the discussion of the Canadian growth outlook ended on the somewhat sour note that growth may disappoint their July forecast", DePratto said.

The yield on the benchmark 10-year bond, which moves inversely to its price, fell 2 basis points to 1.007 percent, the yield on long-term 30-year note dipped 1-1/2 basis points to 1.614 percent and the yield on short-term 2-year bond slid almost 1 basis point to 0.561 percent by 12:30 GMT.

The forecast for 2018 was revised upwards slightly to 2.1 percent from 2.0 previously. Royal Bank of Canada makes up approx 0.14% of Renaissance Technologies's portfolio.Credit Suisse Ag boosted its stake in RY in the latest quarter, The investment management firm added 250,231 additional shares and now holds a total of 3,442,571 shares of Royal Bank of Canada which is valued at $212,716,462. The Canadian dollar has traded in a relatively fixed range of US$0.76 to US$0.78 since July's projections, which could provide some stability for exports going forward. It had earlier been forecast in a July poll to raise rates in the final quarter of 2017, they added.

The exchange rate of the Canadian dollar, known as the loonie, has been relatively steady since May but dropped in response to the BOC's decision today.

The S&P/TSX Composite Index rose 0.12 percent at the close of the trading session to 14,812.99 on Tuesday. "It sends a message that the Bank of Canada is certainly further away from hiking rates and opens the door a crack to cutting rates if need be", he said.

Statistics Canada reported last week that the country's economy contracted at an annual rate of 1.6 per cent in the second quarter due to the wildfires in Fort McMurray, Alta., and a drop in exports.

In a statement that was bleaker than the market had expected, the bank also said the USA outlook for business investment has become less certain, despite a healthy labor market and solid consumption.

The global economy, meanwhile, grew at a slower clip than the Bank had predicted in July.

While Canada's economy shrank in the second quarter, the Bank still projects a substantial rebound in the second half of this year.

"Exports disappointed even after accounting for weaker business and residential investment in the United States, adjustments in the resource sector, and cutbacks in auto production", the bank said in the statement. Measures of core inflation remain around 2 per cent, reflecting offsetting effects of excess capacity and past exchange rate depreciation.

Nevertheless, according to the Bank, the risks to the inflation profile on balance had tilted somewhat to the downside since July.

In this context, the overall balance of risks remained within the zone, for which the current stance of monetary policy is appropriate.

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