— Doug Porter, BMO Capital Markets
As markets expected, the Bank of Canada left its monetary policy unchanged as its meeting on Wednesday, suggesting that economic growth will likely slow in the June quarter. In a dovish statement, the Bank expressed concerns over capacity utilisation and subdued growth, but noted strong consumer spending, the prosperous housing market and solid job growth. Nevertheless, policymakers voted to keep the benchmark Overnight Rate at a record low of 0.50%. Rates are expected to remain unchanged until 2018. Nevertheless, the Canadian Dollar rose shortly after the release, boosted by expectations of an interest rate hike. According to the Central bank, despite the change of mortgage lending rules, the nation's housing market remained on an expansion path. The BoC Governor Stephen Poloz highlighted that the ratio of household debt to income remained at record highs. The Governor also said that the biggest threat to the economy was arising from the United States and Donald Trump's protectionist policies, as about 75% of Canadian exports go to the US.
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