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BoC is bullish on the economy - Nomura

Charles St-Arnaud, research analysts at Nomura explained, "As we expected, the Bank of Canada kept its policy rate unchanged at 0.75%."

Key Quotes:

"The BoC notes that “Risks to the outlook for inflation are now roughly balanced and risks to financial stability appear to be evolving as expected” and that it “judges that the current degree of monetary policy stimulus remains appropriate.” As we expected, the BoC revised down its growth expectation for Q1 2015, now judging that the economy stalled over the quarter."

"However, the BoC expects that this weakness will be temporary with growth already back to potential in Q2 and above potential in H2 2015 and in 2016."

"The sharp recovery is supported by ”the considerable easing in financial conditions that has occurred and by improving U.S. demand”.

"Despite the weaker growth in Q1, “the economy reaches and remains at full capacity around the end of 2016”, helped by the strong recovery."

EUR/GBP unable to recover above 0.7200

EUR/GBP dropped marginally below yesterday’s low and reached at 0.7163, the lowest level since March 19. The euro was able to hold above the 0.7160 zone and recovered modestly.
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