Highlights from the Bank of Canada monetary policy announcement 17 January 2018

USDCAD went on a weild ride to 1.2521 then down to 1.2378.

  • Data has been strong and the economy is operating roughly at capacity
  • Outlook expected to warrant higher rates over time but some continued policy accommodation will likely be needed to keep economy close to potential and inflation on target
  • Will remain cautious in considering future policy adjustments
  • BoC: near-term inflation to fluctuate due to temporary factors
  • BoC: inflation to remain close to 2% target over projection horizon
  • BoC: higher oil prices benefit Canada less than elsewhere (due to price spreads)
  • BoC projects 3.5% global GDP growth over projection horizon

A fairly neutral statement and USDCAD has responded in typical ‘priced in’ fashion by edging higher since the hike. Take out the wild 1.2521/1.2378 swing and we’re buying the fact after selling the rumour 1.2485 trades. Over to the presser next which can be found live on our home page.

Ryan Littlestone

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