The Bank of Canada left interest rates unchanged as widely expected. While they expressed some opinions on bubbly housing markets, the team led by Stephen Poloz was mostly balanced. What’s next?

Here is their view, courtesy of eFXnews:

CIBC World Markets Research comments on today’s Bank of Canada policy decision, noticing that the BoC still leans towards a cup half empty view of the economy, despite that cup having filled up a fair bit in the last half year.

Why not hike sooner?  

CIBC notes that the BoC emphasizes soft wages and core CPI as indicators that there is still material slack, and the temporary nature of some of the recent growth drivers.

“An upturn in capital spending, and some momentum in exports, will be needed for a turn to a more hawkish tone, but it will also be easier for the Bank to start talking about rate hikes after a further hike or two from the Fed, which would prevent rate hikes in Canada from lifting the C$ materially,” CIBC argues.

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