The last time the Bank of Canada adjusted interest rates was September 2010 and there is no sign of change

Most economists believe Governor Poloz will keep rates on hold thru 2015 and today’s statement won’t hint at anything different.

Bank of Canada picture

A photo of the Bank of Canada taken around the last time they moved rates

The decision is at 10 am ET (1500 GMT) and isn’t followed by a press conference but Poloz is scheduled to speak at 5:45 pm (2245 GMT) at an event in Toronto.

The most recent Bank of Canada decision was Oct 22 and markets initially sold the Canadian dollar because the BOC removed its explicit neutral bias but the move later retraced when officials emphasized that nothing had changed; they just didn’t want to be boxed in by the wording.

The key part of the BOC statement is always at the end:

Weighing all of these factors, the Bank judges that the risks to its inflation projection are roughly balanced. Meanwhile, the financial stability risks associated with household imbalances are edging higher. Overall, the balance of risks falls within the zone for which the current stance of monetary policy is appropriate and therefore the target for the overnight rate remains at 1 per cent.

Since the decision, economic data for Canada has been strong. Reports on jobs, retail sales, manufacturing sales and GDP were all significantly stronger than expected and CPI numbers were high. The US economy is also strengthening and exports picked up in Q3. All other things being equal that would argue for a more-hawkish shift from the BOC.

But all things aren’t equal because of the dramatic decline in oil prices. Not only is that a key Canadian export but it also reduced the outlook for inflation.

How to trade it

All told, despite the oil risks, I think the BOC will express some optimism on the economy and that it’s better to be a Canadian dollar buying into the decision.