(The Canadian Press) TORONTO – The Canadian dollar was lower Thursday after the governor of the Bank of Canada said he disagreed with a prominent economic think-tank that said the central bank would likely have to increase rates by the end of next year.
The loonie was down 0.23 of a cent to 95.72 cents US.
Stephen Poloz told the Senate standing committee on banking, trade and commerce Wednesday that he respects the view of the OECD but added different organizations can use different approaches to predict future economic growth.
Poloz said the Bank of Canada's thinking on the issue is based on its own view of slack in the Canadian economy and the fact that inflation, at 1.1%, is currently well below where he would like it to be.
There was also a fresh round of speculation that the Federal Reserve may start cutting back on its monetary stimulus early in the new year.
The release of the minutes of the last Fed meeting showed that the central bank would likely start tapering off its bond purchases in ``coming months'' if the job market improved further. Fed members also weighed the possibility of slowing the US$85 billion of asset purchases even without clear evidence of a strengthening job market.
The central bank's monthly purchase of assets bonds have kept long-term rates low and pushed investors into stocks. The quantitative easing has underpinned substantial gains on many markets this year.
January crude on the New York Mercantile Exchange gained 20 cents to US$94.05 a barrel.