Quote:
Originally Posted by DoubleF
I'd wonder whether part of BOC's plan last year had to do with what other countries were doing as well. Exchange rates would rise negatively in our favor if the borrowing Canadian rates rose while foreign rates didn't move, right?
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Correct. If we strayed from other banks it would negatively hurt Canada short term especially in relation to the US, but would help us long term. Good monetary policies in the mid to late 2000s is why Canada had the least severe recession out of the G8. unfortunately, despite our good policies back in 2008, we still got taken along with the globalized tidal wave.
That's also why BoE blinking first is likely to cause Britain to fall in a precipice of inflation, but they will look stronger in the short term.