Bank of Canada holds rates at 1.00%, as expected

Author: Adam Button | Category: Central Banks

Highlights of the Bank of Canada interest rate decision and statement on Dec 6, 2017:

  • Says will 'continue to be cautious' on rate move
  • Repeats that higher rates will likely be needed over time
  • Says will be guided by incoming data
  • Global outlook subject to 'considerable' uncertainty, including geopolitical developments and trade policies
  • Recent Canadian data in line with October outlook; employment growth has been 'very strong' wages have shown some improvement
  • Q3 growth was stronger than forecast but is expected to moderate
  • Revised higher level of prior output unlikely to have significant implications for output gap because they imply a higher level of potential growth
  • Housing has continued to moderate, as expected
  • Core inflation has edged up in recent months, reflecting continued absorption of economic slack
  • Exports were softer than forecast in Q3 but latest trade data support expectation growth will resume
  • Some indicators show continued labour market slack

USD/CAD was at 1.2662 before the announcement but jumped to 1.2737 afterwards.

This is less-hawkish than feared.

There is no press conference.

The final paragraph:

Based on the outlook for inflation and the evolution of the risks and uncertainties identified in October's MPR, Governing Council judges that the current stance of monetary policy remains appropriate. While higher interest rates will likely be required over time, Governing Council will continue to be cautious, 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.

Previously:

Based on this outlook and the risks and uncertainties identified in today's MPR, Governing Council judges that the current stance of monetary policy is appropriate. While less monetary policy stimulus will likely be required over time, Governing Council will be cautious in making future adjustments to the policy rate. In particular, the Bank will be guided by incoming data to assess the sensitivity of the economy to interest rates, the evolution of economic capacity, and the dynamics of both wage growth and inflation.

...

That's essentially no change in guidance.