Bank of Canada’s Rate Announcement Today

Bank of Canada is expected to leave the policy rate unchanged at 1% for a 7th month, although the accompanying statement will slightly be more hawkish than the previous one, on signs of rising inflation and strong domestic growth. Its widely speculated that the BoC will resume tightening by June 2011, as now uncertainties in Japan following the natural disasters in March, continued unrest in the Middle east and inflation against appreciation in Canadian dollar have prompted the BoC to stay on the sideline in April.

In Asia, the South Korean Central Bank announced today its decision regarding interest rates, where it decided to keep the rates unchanged at 3%, in line with market expectations. The bank reiterated that high crude oil prices together with the aftermath of the Japanese earthquake will affect the economic growth negatively with rising inflation.

Today’s data focus in Europe will be on the UK’s Trade Balance/Core CPI, followed by German and EU ZEW economic sentiment, while the US session will see the release of the US trade balance and Bank of Canada’s rate statement.