Highlights of the December 5 Bank of Canada decision
There may be more room for non-inflationary growth
Inflation has been evolving as expected
Future policy stance depends on oil, investment and capacity
Appropriate pace of hikes to depend on 'a number of factors'
Data show economy has less momentum going into Q4
Expects CPI to ease more than forecast in the coming months, due to lower gasoline prices
Household credit and housing markets appear to be stabilizing
Watching impact of tighter mortgage rules on builders and buyers
Oil prices have fallen sharply
Activity in Canada's energy sector will likely be materially weaker than expected
Business investment outside of energy expected to strengthen
Repeats that rates will need to rise to neutral
All 23 economists surveyed by Bloomberg forecast no change
Rates were hiked to 1.75% from 1.50% on October 24
USD/CAD was trading at 1.3287 shortly before the decision and rose to 1.3371 afterwards. This statement makes it much less likely that the BOC will hike in January. The line about more room for non-inflationary growth is key along with a strong emphasis on the oil price decline.
The final part of the statement focuses on effect of higher rates (was there previously), the persistence of the oil price shock (new), the evolution of business investment (new), global trade policy (was there previously) and the assessment of spare capacity in the economy (new).
Overall, the BOC looks to be setting itself up for a move to the sidelines for a few months. Poloz speaks tomorrow in a speech that's designed to fine tune expectations.