Economy expected to recover after contraction: Bank of Canada

Wed Sep 16, 2015 2:24pm EDT
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WINNIPEG (Reuters) - After contracting in the first half of the year, Canadian economic activity is expected to recover with currency-sensitive export sectors regaining momentum, Bank of Canada Deputy Governor Agathe Cote said on Wednesday.

In a presentation in Winnipeg, Cote said the current level of the Canadian dollar is consistent with its historical relationship with oil prices. U.S. economic activity is also expected to accelerate, she said.

Cote's comments were in line with the bank's most recent economic assessment released in July. The central bank has cut interest rates twice this year to try to bolster an economy that has been hit by the cheap price of oil.

Markets see a more than 80 percent probability the bank will hold rates at 0.50 percent when it makes its next decision in October.

In contrast, policymakers in the United States began a two-day meeting on Wednesday to decide whether to raise interest rates for the first time in nearly a decade. Most experts see a slightly higher probability the Federal Reserve will stand pat for now.

(Reporting by Rod Nickel, writing by Leah Schnurr; Editing by Chris Reese and Chizu Nomiyama)

A woman walks past the Bank of Canada office in Ottawa, Canada July 16, 2015. REUTERS/Chris Wattie