Canadian Inflation Postive For First Time In Five Months, Will BoC Remain On Hold?

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USD/CAD – Canadian consumer prices rose 0.1% in October pushing the annualized rate to 0.1% from -0.9%. In was time inflation registered above 0.0% in five months as food, tobacco, and prices for personal care items appreciated from a year ago. A 3.1% drop in transportation costs along with a 13% drop in gasoline prices continue to keep inflation below the BoC’s 2% target. Governor Mark Carney that the strong Canadian dollar is threatening the central banks ability to return prices to ideal levels for promoting growth. The strong local currency is also hampering demand for exports putting the economic recovery at risk. The central bank has pledged to keep rates on hold until mid-2010 unless upside risks to inflation grow.

GBP/USD – The Bank of England released the minutes from their November meeting showing a 7-1-1 vote regarding the decision to add 25 billion to their asset purchase program. Committee member David Miles called for an additional 40 billion in QE to guard against downside risks, while chief economist Spencer Dale voted to refrain from additional measures. The minutes failed to shed any light on future policy reinforcing Governor King’s recent comment that the central bank remains  “completely open minded” on whether to add to the asset purchase program. To discuss this and other topics visit the GBP/USD Forum.