BoC keeps rates on hold but statement cautious
As expected, the BoC has kept rates on hold, though in its statement, it has revealed downward revisions to growth due to macroeconomic developments. They also expected inflation to ease off, though still see room for non-inflationary growth despite the heavy drop off in Oil prices. Inflation will be softer across the globe as a function of lower oil prices, though as a producer, there is a negative impact to growth and output, especially with Canadian oil prices having been hit hard due to pipeline issues.
The BoC has also said that the pace of rate hikes will be dependent on factors such as the higher rate environment, housing, and consumption, so this could detract from the rate pricing for 2019 which currently sees 3 hikes through (next) year. It will reassess these factors in a monetary policy review in January.
The impact on the CAD has been pretty dramatic, with the spot rate tearing back through 1.3300 and tipping the previous highs above 1.3360. The next area to watch for is the double top just ahead of 1.3400, so this will need some momentum in order to break through which we may see if North American traders can generate some momentum.