BOC leaves interest rates at 0.5%

Sorry for the delay in the post, our backend server decided this was an apt time to reboot itself.

Here's the rest of the BOC headlines

  • Global economic conditions have strengthened as anticipated

  • Uncertainty remains diminished and has undermined business investment and dampened investment with trading partners

  • Rapid back-up in global bond yields after US election partly reflects anticipation of fiscal expansion

  • Canadian yields have risen significantly in context to the US

  • Q4 growth is expected to moderate after Q3 rebound

  • Biz investment and non-energy exports continue to disappoint

  • Considerable slack remains despite ongoing employment gains

  • Total inflation has picked up but is slightly below expectations, largely due to lower food prices

That sounds like splitting hairs on inflation. It's within their target range so no need to moan.

Overall, it acknowledges the positives, highlights the negatives and leaves the BOE sitting on their hands. USDCAD hit 1.3261 at its worst.

Here's the full statement.

Bank of Canada maintains overnight rate target at 1/2 per cent

FOR IMMEDIATE RELEASE Media Relations613-782-8782 Ottawa, Ontario7 December 2016

The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1/2 per cent. The Bank Rate is correspondingly 3/4 per cent and the deposit rate is 1/4 per cent.

Economic data suggest that global economic conditions have strengthened, as the Bank anticipated in its OctoberMonetary Policy Report(MPR). However, uncertainty, which has been undermining business confidence and dampening investment in Canada's major trading partners, remains undiminished. Following the election in the United States, there has been a rapid back-up in global bond yields, partly reflecting market anticipation of fiscal expansion in a US economy that is near full capacity. Canadian yields have risen significantly in this context.

In Canada, the dynamics of growth are largely as the Bank anticipated. Following a very weak first half of 2016, growth in the third quarter rebounded strongly, but more moderate growth is anticipated in the fourth quarter. Consumption growth was robust in the third quarter, supported by the new Canada Child Benefit, while the effects of federal infrastructure spending are not yet evident in the GDP data. Meanwhile, business investment and non-energy goods exports continue to disappoint. There have been ongoing gains in employment, but a significant amount of economic slack remains in Canada, in contrast to the United States. While household imbalances continue to rise, these will be mitigated over time by announced changes to housing finance rules.

Total CPI inflation has picked up in recent months but is slightly below expectations, largely because of lower food prices. Core inflation is close to 2 per cent because the effect of persistent economic slack is still being offset by that of past exchange rate depreciation, although the latter effect is dissipating.

Overall, the Bank's Governing Council judges that the current stance of monetary policy remains appropriate. Therefore, the target for the overnight rate remains at 1/2 per cent.