With that in mind, it may be difficult for Poloz and Wilkins to avoid dropping hints about future policy when they speak after the rate decisions. If the BoC maintains a firmly neutral tone, confirming that rates won’t be increased again before the end of the year and provide very little insight into future policy actions, USD/CAD will soar.
However if they wrap a comment about having no predetermined path for rates with a positive outlook for the economy, we could see USD/CAD drop.
We are expecting the BoC to keep policy rates steady, but there remains a trace of doubt in the market’s mind due to past surprises. Since September’s move, we’ve heard a markedly more cautious tone from policymakers. While the Bank of Canada is clearly data dependent, we anticipate that caution will be very prevalent in the policy statement,
check calendar: BoC Rate Statement (45 min)
BoC Interest Rate Decision
and BoC Gov Poloz Speaks
The BOC has kept rates unchanged at 1.0%. That is as expected.
BOC pledges caution on future rate increases
Sees economy Running close potential over next two years
Projects output gap at zero in the third quarter of 2017
Less monetary stimulus will likely be required over time
Housing spending to slow on policy changes, higher rates
Lifts 2017, 2018 GDP forecasts to 3.1% and 2.1% from 2.8% and 2%
BoC postpones 2% inflation target achievement to H2 2018
NAFTA talks create substantial uncertainty for Bank of Canada Outlook