BoC Stands Pat – CAD Plummets

BoC Stands Pat – CAD Plummets

No Surprise

As expected the Bank of Canada (BoC) held its benchmark interest rate steady (+1.25%) this morning as it warned “rising geopolitical and trade conflicts risk undermining global growth.”

The BoC expects inflation will move higher this year before returning close to its +2% target in 2019.

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“Despite strengthening global demand, growth of business investment in export-oriented goods industries is anticipated to be restrained by elevated uncertainty around trade policy, regulatory concerns and incentives to shift investment to the United States following the U.S. tax reform,” the Bank of Canada said in a policy report that accompanied the rate decision.

Note: The BoC has raised its key interest rate three times since mid-2017, most recently in January.

It said on Wednesday that it anticipates higher rates will be warranted over time but added that it would remain cautious and use incoming economic data to guide its decisions.

Loonie Takes a Dive

CAD (C$1.2638) has come under immediate pressure, falling -80 pts outright to take shy of strong dollar resistance at C$1.2650.

Next up is Governor Poloz press conference at 11:15 am EDT

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