Bank of Canada holds rates unchanged, as entirely expected
Full text
Highlights from the statement:
- Current stance of monetary policy still appropriate
- Risks to projected path of inflation are roughly balanced
The BOC shifted away from dovish to neutral last month and that has continued.
- Uncertainty over global risks is not diminished
- Assumes fiscal expansion to lift US GDP by 0.5% by end of 2018
- Sees material consequences from any US protectionism
- Export growth will be limited by recent CAD appreciation
A bit of jawboning in there. The export forecast was cut to 0.7 p of GDP from 0.8 points.
Changes in forecasts:
- Sees 2017 GDP at 1.3% from 1.1%
- Sees 2018 at 2.1% from 2.0%
On growth:
- Household spending to be main driver of growth in 2017
- Resource sector adjustment to oil shock largely complete
- Economy has material excess capacity; continues to see return to full capacity around mid-2018
USD/CAD ticked lower on the initial headlines to 1.3070 from 1.3080.
The Bank of Canada released the January Monetary Policy Report along with the statement. Read it here.
