Investing.com – The Bank of Canada (BoC) decided on Wednesday to keep its benchmark interest rate on hold and warned that it would maintain a "cautious" stance with regard to future changes.
As expected, the BoC said it was leaving its overnight cash rate unchanged at 1.00%.
The Canadian monetary authority also held the bank rate steady at 1.25% and left the deposit rate at 0.75%.
In the announcement, the BoC referred to the recent pickup in inflation as due to stronger economic activity and higher gasoline prices, while measures of core inflation have edged up in accordance with a narrowing output gap and the diminishing effects of lower food prices.
The Canadian central bank reiterated that it expects inflation to rise to 2% in the second half of 2018.
The BoC further noted expectations for the global growth to average around 3.5% over 2017-19.
“However, this outlook remains subject to substantial uncertainty about geopolitical developments and fiscal and trade policies, notably the renegotiation of the North American Free Trade Agreement (NAFTA),” the press release indicated.
"While less monetary policy stimulus will likely be required over time, Governing Council will be cautious in making future adjustments to the policy rate," the BoC concluded.
BoC governor Stephen Poloz was to comment on the decision at a press conference later in the day.
Following the press release, the loonie weakened. USD/CAD was trading at 1.2765 from around 1.2680 ahead of the announcement.