Bank of Canada maintains key interest rate at 1 pct

The Bank of Canada kept its main monetary policy interest rate on hold at 1 percent today, as was widely anticipated. The central bank released its Monetary Policy Report in which the growth outlook was slightly upgraded. The BoC now forecasts the 2017 economic growth rate at 3.1 percent, reflecting the strong growth witnessed in the first half of 2017. The central bank expects the economy to expand 2.1 percent in 2018 and 1.5 percent in 2019.

Despite the signals at a possible upgrade to estimated economic potential, the central bank kept this unchanged overall, bumping up the level by around 0.1 percentage points. Therefore, the output gap is seen as being effectively zero, signifying that the economy is running at capacity, noted TD Economics in a research report.

The BoC sees recent inflation figures consistent with its expectations. Several factors continue to hold back inflation in the near term, slightly countered by hurricane impacts on gas prices. With core measures rising, in line with the absorption of economic slack the BoC sees inflation reaching its target at the end of 2018, and remaining at that pace thereafter.

At 19:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was highly bearish at -112.498, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 30.9376. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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