Investing.com – The Bank of Canada (BoC) decided Wednesday to keep its benchmark interest rate on hold at a record low in what was its first policy decision in 2017.
As expected, the BoC said it was leaving its overnight cash rate unchanged at 0.50%, a record low where it has been since July 2015.
The Canadian monetary authority also held the bank rate steady at 0.75% and left the deposit rate at 0.25%.
“Uncertainty about the global outlook is undiminished, particularly with respect to policies in the United States,” the BoC said in the release.
With regard to possible tax policies to be implemented by incoming U.S. president Donald Trump, the Canadian central bank admitted that it had made some initial assumptions that resulted in “a modest upward revision to its U.S. growth outlook”.
Regarding inflation, the BoC indicated that it had been lower than anticipated since October due primarily to declines in food prices.
"As consumer energy prices rise and the impact of lower food prices dissipates, inflation is expected to move close to the 2% target in the months ahead and remain there throughout the projection horizon while excess capacity is being absorbed," it said.
Following the press release, the loonie pared gains. USD/CAD was trading at 1.3062 from around 1.3077 ahead of the announcement.