TD Bank predicts the Canadian dollar won’t regain strength for some time and instead forecasts a further decline. Following the drop in oil prices and last week’s interest rate cut, the dollar has reached a six-year low.
In its updated Economic Forecast released on Monday, TD is predicting yet another cut to the Canadian interest late sometime in March before holding steady.
Last week’s cut in interest rate by the Bank of Canada came as a surprise to many. The interest rate was predicted to hold steady at 1 per cent as it has been for the last few years.
The key interest rate, also known as the bank rate or lending rate, is the rate of interest on which the Bank of Canada charges commercial banks on loans and advances. A lower interest rate means banks will acquire money from the Bank of Canada at a lower price, which could result in savings to consumers through lower loan or mortgage costs.
The cut in interest is hoped to increase spending but has also resulted in a further decrease in the Loonie’s value.
The Canadian dollar will likely be “sub 90 cents for many years,” TD chief economist Craig Alexander said.