Highlights from the Bank of Canada rate decision and MPR:

  • Prior was 1.75%
  • BOC removes description of key rate as 'appropriate'
  • In determining future path for rates will watch losely "to see if the recent slowdown in growth is more persistent than forecast"
  • Canadian economy has been resilient but indicators since Oct MPR have been mixed
  • Output gap will be wider than expected in October
  • Canadian economy no longer operating close to capacity
  • Indicators of consumer confidence and spending have been unexpectedly soft
  • Business investment appears to have weakened after a strong third quarter
  • Residential investment was robust through most of 2019, moderating to a still-solid pace in the fourth quarter
  • BOC projects the global economy will grow by just over 3% in 2020 and 3.25% percent in 2021
  • BOC forecasts Canadian GDP will grow by 1.6% and 2% in 2021, following 1.6% growth in 2019
  • BOC expects inflation will stay around the 2 percent target over the projection horizon

This is dovish stuff.

The final paragraph:

In determining the future path for the Bank's policy interest rate, Governing Council will be watching closely to see if the recent slowdown in growth is more persistent than forecast. In assessing incoming data, the Bank will be paying particular attention to developments in consumer spending, the housing market, and business investment.

The previous statement said:

Based on developments since October, Governing Council judges it appropriate to maintain the current level of the overnight rate target. Future interest rate decisions will be guided by the Bank's continuing assessment of the adverse impact of trade conflicts against the sources of resilience in the Canadian economy - notably consumer spending and housing activity. Fiscal policy developments will also figure into the Bank's updated outlook in January.

Poloz will be asked at the press conference at 1615 GMT if the removal of the word 'appropriate' is a signal. The BOC often downplays changes in the statement and says that every meeting starts with a blank page so that might reel in some of the CAD declines but the overall message is undoubtedly dovish but they're not yet teeing up a rate cut.