Markets eye Bank of Canada rate cut for first time as oil rout damage deepens

(January 15, 2015 , posted in Economy)

Collapsing oil prices and a weakening economy are pushing markets to start pricing in a potential interest rate cut by the Bank of Canada this year.Those expectations grew Tuesday after Bank of Canada deputy governor Timothy Lane gave a speech in Madison, Wisc., that economists saw as tilting more dovish than usual. Mr. Lane’s speech focused on the economic effects of dropping oil prices, which has become a central concern for policymakers in Canada.“Lane’s final phrase that ‘however things play out, we have the tools to respond’ highlights that lower rates are an option if conditions weaken sufficiently,” said Benjamin Reitzes, senior economist at BMO Capital Markets.  -