OTTAWA, Oct 25 (Reuters) - The Bank of Canada held interest rates steady on Wednesday, as expected, saying that while less stimulus will be required over time the bank will be cautious as it considers future moves given the risks and uncertainties facing the economy.
In a dovish statement that emphasized "substantial uncertainty" about the renegotiation of NAFTA, the central bank said the economy is operating close to its potential but slack remains in the labor market.
It also noted the stronger Canadian dollar twice in its policy statement, saying inflation will rise to 2 percent a little bit later in 2018 than previously expected and export growth will be slightly slower because of the currency's recent appreciation.
"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 bank said in a statement.
"In particular, the bank will be guided by incoming data to assess the sensitivity of the economy to interest rates, the evolution of economic capacity, and the dynamics of both wage growth and inflation."