Highlights of the September 4, 2019 Bank of Canada decision:

Highlights of the September 4, 2019 Bank of Canada decision:
  • Repeats that "the current degree of monetary policy stimulus remains appropriate"
  • "Governing Council will pay particular attention to global developments and their impact on the outlook for Canadian growth and inflation"
  • "Escalating trade conflicts and related uncertainty are taking a toll on the global and Canadian economies"
  • Canada's economy is operating close to potential and inflation is on target
  • Drops reference to saying it will pay particular attention to developments in energy sector
  • Q2 growth was stronger than expected but some was temporary
  • Housing activity has regained strength more quickly than expected, could add to high household debt
  • Wages have picked up but consumer spending has been unexpectedly soft
  • Business investment contracted sharply on trade uncertainty
  • Inflation was stronger than expected in July largely due to temporary factors
  • All 24 economists surveyed by Bloomberg expected no change in rates
  • The market was pricing in an 11% chance of a cut today and a 62% chance of a cut in October

The previous statement said "the degree of accommodation being provided by the current policy interest rate remains appropriate."

The reference to the housing market is surprisingly hawkish and shows that the central bank doesn't want to add to it. That said, the BOC is hardly in control of 5-year or 10-year rates, which are far below the BOC overnight rate (GCAN 10 year is at 1.14%).

The change in the final sentence of the statement is interesting:

Prior: As Governing Council continues to monitor incoming data, it will pay particular attention to developments in the energy sector and the impact of trade conflicts on the prospects for Canadian growth and inflation.

Now: As the Bank works to update its projection in light of incoming data, Governing Council will pay particular attention to global developments and their impact on the outlook for Canadian growth and inflation.

Overall, Poloz is taking a bit of a victory late here, noting that "Canada's economy is operating close to potential and inflation is on target." He might be better served to look ahead.

There is nothing particularly dovish here and an October cut is far from assured unless economic data ticks lower or the trade war rages. With that, USD/CAD is quickly down to 1.3277 from 1.3325.