The US dollar (USD) remained largely unchanged against the Canadian dollar (CAD) on Wednesday. Trading has hovered below the 1.3700 mark after a rebound from mid-week lows beneath 1.3600. Investors seem to be waiting for the forthcoming decisions from the Bank of Canada (BoC) and the US Federal Reserve (Fed), which are set to be announced later in the day.
Most analysts anticipate that the BoC will maintain its key interest rate at 2.25%. This expectation persists even amid rising inflation concerns linked to ongoing conflicts in the Middle East. Tiff Macklem, the governor of the central bank, noted earlier this month that he expects a short-term spike in inflation, but he also believes that the interest rate could return to 2% by the year’s end.
Meanwhile, the Fed will disclose the outcomes of its previous meeting a few hours later, led by Chairman Jerome Powell. It’s expected that interest rates will remain stable once again, potentially until 2026. However, views within the Monetary Policy Committee are notably divided. Kevin Warsh, likely the next chair of the Fed, may face pressure from President Trump to adopt a looser monetary policy.
In a related update, Powell’s term on the bank’s board has been extended to 2028. This puts him in a position to decide whether to continue in his role or step down as requested by President Trump. Generally, the Fed chair tends to retire after four years, but given the circumstances, Powell has stated that he would consider staying if he feels the bank’s independence is at risk.
economic indicators
Central bank interest rate decisions
The Bank of Canada (BoC) announces interest rate adjustments at its eight scheduled meetings each year. If inflation surpasses targets (hawkish stance), the bank will likely raise rates to help manage inflation. This generally supports the Canadian dollar, as higher rates can attract foreign investment. Conversely, if the bank determines inflation is below target (dovish stance), it may lower rates to stimulate economic growth, which would usually weaken the CAD due to decreased foreign interest.
Final release:
Wednesday, March 18, 2026 13:45
frequency:
irregular
Actual:
2.25%
consensus:
2.25%
Previous:
2.25%
economic indicators
Fed interest rate decisions
The Federal Reserve meets eight times a year to discuss monetary policy and set interest rates. Its dual mandate is to maintain inflation at around 2% and to ensure full employment. The most recent interest rate decisions will affect the USD; generally, increases in rates lead to a stronger dollar as they attract foreign capital. Conversely, cuts tend to weaken the dollar as funds move to countries offering better returns. Should rates remain unchanged, eyes will likely turn toward the tone of the Federal Open Market Committee’s (FOMC) statements, which can be interpreted as either hawkish or dovish.
Final release:
Wednesday, March 18, 2026 18:00
frequency:
irregular
Actual:
3.75%
consensus:
3.75%
Previous:
3.75%
