Loonie hits fresh lows on rate announcement

The Canadian dollar hit fresh eight-month lows Wednesday as comments by the Bank of Canada suggested an interest rate increase could be even further off into future than previously expected and ahead of a jobs report expected to show the unemployment rate edged higher in February.

The currency closed down 0.33 of a cent at 96.95 cents US after losing more than half a cent earlier in the day after the bank said that "the considerable monetary policy stimulus currently in place will likely remain appropriate for a period of time, after which some modest withdrawal will likely be required."

The bank kept its benchmark overnight interest rate —the rate at which banks lend to each other— unchanged at one per cent.

Bank governor Mark Carney has been warning for most of the last year that rates will rise when the economy shows signs of picking up. He has been the only one of the central bankers of the G7 industrialized economies to talk about hiking rates.

The dollar fell more than three cents against the U.S. dollar through February as economic data has shown falling retail sales at the end of 2012, a contraction of economic growth in December and low inflationary pressures.

The loonie could stay under pressure ahead of Friday’s release by Statistics Canada of its February employment report, widely expected to show job creation of around 7,500, and an increase in the unemployment rate to 7.1 per cent from seven per cent as more people look for work.