Bank of Canada: Rates unchanged, no dovish shift – ING

By FXStreet Research Team at ING, notes that the Bank of Canada has kept rates unchanged at 0.5% as widely expected and the statement remained broadly unchanged from the last meeting.

Key Quotes

“Indeed, the statement reiterates that “the risks to the profile for inflation are roughly balanced”, reflecting the fact that core inflation continues to remain around the 2% level. However, inflation is not the key concern for the Bank of Canada, who have for a long time now placed greater emphasis on encouraging growth in non-resource sectors.

Although non-energy exports have picked up, the BoC themselves acknowledged in their last Monetary Policy Report that these sectors have been boosted by the weaker CAD. Thus, given that the CAD had strengthened around 9% since January’s meeting, we are slightly surprised that we didn’t see a more pronounced dovish shift. Incidentally, we suspect that this is the BoC’s lower bound for CAD strength.

In reality, the BoC may have wanted to wait until the Federal Budget is announced on 22nd March. Indeed, there is a reference to this in the statement which states that the effect of any fiscal measures will be incorporated into the April projections. Going forward, the risks to Canadian growth are …read more

Source:: FX Street