The Globe and Mail reports in its Saturday edition that it will be challenging for the Bank of Canada to make significant interest rate cuts if U.S. interest rates remain unchanged. The Globe's guest columnist John Rapley writes that if interest rates in Canada fall much below those in the U.S., the Canadian dollar will weaken, as investors chase higher returns stateside. Investors were disappointed last week that the Bank of Canada remained cagey as to when rate cuts will finally come. Mr. Rapley says investors may be in store for more of this, as lower interest rates may not come as soon as they want. The new year began with optimism as inflation fell and interest rates were expected to follow suit in Western countries. This was, however, arguably more about faith than facts. The most recent U.S. inflation report found that while headline inflation had continued falling, core inflation had levelled off at more than 3 per cent. That has led the Federal Reserve governors to cool down talk of rate cuts. Increasingly, the betting is that interest rates in the United States will stay where they are for now. Markets are still pricing in summertime cuts, but the recent data have brought even that prospect into question.