Chances to raise interest rates in Canada is decreasing

The Canadian dollar declined on Friday against the US dollar after weaker than expected inflation figures in Canada. This reduces, according to market participants, the chances of raising interest rates next month.
Inflation climbed to 1.3% in May, which was below analysts' average expectations of 1.5% and far below the target of the Canadian central bank of 2%.
Food and fuel prices have been the main source of slowdown in consumer price growth in Canada.
According to market observers, the Canadian central bank will find it very difficult to raise interest rates next month, given the data.
Chances to raise interest rates in July declined to just 20%, compared with 33% before the data was published.
According to statements by Canadian central bank's officials this week, the moderate monetary policy of the Canadian central bank has played its role, and the bank is expected to assess whether interest rates should remain at their current record lows.
Interest on two-year Canadian bonds fell by 3 basis points below US ones, or the spread between the two instruments was -43.8 basis points. On Thursday of last week, this spread fell to its lowest value in four months - at -40.8 basis points.