Canadian motor carriers who have seen their U.S. dollar revenues drop significantly since the rise of the Canadian dollar in recent weeks are breathing a sigh of cautious relief over yesterday’s drop in the value of the loonie.
Yesterday’s quarter point drop in the Bank of Canada’s trend-setting overnight bank rate defied the projections of most of the country’s top economists who thought the central bank would stand pat following last week’s stronger than expected employment report.
David Bradley, CEO of the 4,500 member Canadian Trucking Alliance, said the industry was hoping for a 50 basis point cut.
"There is still a 200 basis point gap between Canadian and U.S. short-term interest rates, which gives the bank leeway for further reductions in September. The important thing is that the bank has clearly signaled that it recognizes that the dollar has had a negative impact on the economy and that its policy bias is towards a further softening in interest rates which should have a moderating impact on the currency," Bradley said.
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