Bank of Canada can't ignore emerging market turmoil

The recent turmoil in emerging markets is a knock to Canada's trade and commodity dependent economy that the Bank of Canada can't ignore. Although it has only had a modest negative impact on Canada's financial markets so far, its too early to know the full impact it will have on emerging market growth and, most importantly for Canada, global commodity prices. Accordingly, we think the Bank of Canada's policy needle moved even closer towards an easing bias last week, supporting our view that interest rates are likely to remain unusually low for a long time to come.