Bank of America comments on weakening loonie
Bank of America’s Carlos Capistran says even with a weaker currency, there’s still no incentive for the Bank of Canada to consider any rate hikes soon.
Bank of America says the Bank of Canada is likely to stay on the sidelines even as the loonie weakens, arguing that currency swings alone won’t be enough to force a policy shift.
Carlos Capistran, head of Latin America and Canada economics at Bank of America, said a soft Canadian dollar has not historically translated into sustained inflation pressure, noting weak domestic demand and a negative output gap leave little room for rate hikes.
On Thursday, the loonie fell as low as $1.417 per U.S. dollar, its lowest intraday level since April 2025. The U.S. dollar also continued to strengthen as oil prices declined.
