BoC kept overnight rate unchanged at 1.75% as widely expected. Canadian Dollar jumps as the central bank sounds more upbeat than in October. Most notably, in the accompanying statement, the language regarding resilience of Canada’s economy being tested was removed. Also, the monitoring of global slowdown spreading beyond investment was omitted.
Instead, BoC concluded today by saying “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..”
Back in October, BoC said, “All things considered, Governing Council judges it appropriate to maintain the current level of the overnight rate target. Governing Council is mindful that the resilience of Canada’s economy will be increasingly tested as trade conflicts and uncertainty persist. In considering the appropriate path for monetary policy, the Bank will be monitoring the extent to which the global slowdown spreads beyond manufacturing and investment. In this context, it will pay close attention to the sources of resilience in the Canadian economy – notably consumer spending and housing activity – as well as to fiscal policy developments.”
