Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions Saved Articles My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials HomeNewsEconomyBank of Canada can let loonie weaken and skip hikes, Bank of America saysEven with a weaker currency, there’s simply no case for the Bank of Canada to consider rate hikes soonAuthor of the article: You can save this article by registering for free here. Or sign-in if you have an account.A weak loonie doesn’t typically lead to much inflationary pressure in Canada. Photo by Brent Lewin/BloombergThe Bank of Canada is likely to keep rates on hold through most of 2027 and allow the Canadian dollar to weaken further even if United States monetary policy tightens, Bank of America says.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountorThe loonie fell as low as $1.417 per U.S. dollar on Thursday, its lowest intraday level since April 2025. The greenback has been rallying, and oil prices have been softening, as traders bet that the Federal Reserve will start raising interest rates soon and that the U.S.-Iran peace deal will hold together.But even with a weaker currency, there’s simply no case for the Bank of Canada to consider rate hikes soon, said Carlos Capistran, head of Latin America and Canada economics at BofA Securities. Headline inflation was 2.8 per cent in April, above the central bank’s two per cent target, but it was driven by fuel costs. Underlying price pressures are soft, Capistran said.SUBSCRIBER EXCLUSIVE: FP West: Energy Insider brings you behind the oilpatch’s closed doors with exclusive insights from insiders every Wednesday morning.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of FP West: Energy Insider will soon be in your inbox.We encountered an issue signing you up. Please try again“The economy is weak and the output gap is negative. So it’s very difficult to think that inflation is there because of demand pressures,” he said during a webcast.A weak loonie doesn’t typically lead to much inflationary pressure in Canada, Capistran said. So if the Fed were to hike, “I think that the Bank of Canada could still remain on hold and let that Fed movement go to the Canadian dollar.” Join the Conversation This website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.