Bank of Canada kept overnight rate target unchanged at 1.25% as widely expected.
Some highlights of the statement:
- Trade policy developments are an important and growing source of uncertainty for the global and Canadian outlooks.
- The Bank continues to monitor the economy’s sensitivity to higher interest rates.
- Inflation is running close to the 2 per cent target and the Bank’s core measures of inflation have edged up, consistent with an economy operating near capacity.
- Wage growth has firmed, but remains lower than would be typical in an economy with no labour market slack.
- While the economic outlook is expected to warrant higher interest rates over time, some continued monetary policy accommodation will likely be needed to keep the economy operating close to potential and inflation on target.
- Governing Council will remain cautious in considering future policy adjustments, guided by incoming data in assessing the economy’s sensitivity to interest rates, the evolution of economic capacity, and the dynamics of both wage growth and inflation.
- Full statement here
There was no elaboration on NAFTA negotiations nor risk of trade war. BoC maintained tightening bias but sounds very cautious.
USD/CAD is steadily in consolidation from 1.3000 temporary top.