Highlights of the September 2, 2014 Bank of Canada interest rate decision:

  • Interest rates unchanged at 1.00%, as expected
  • Repeats key line: “The Bank is remains neutral with respect to the timing and direction of the next change to the policy rate, which its timing will depend on how new information influences the outlook and assessment of risks.”
  • Says recent data reinforce the Bank’s view that the earlier pickup in inflation was attributable to the temporary effects of higher energy prices
  • Global economy is performing largely as expected
  • Recovery in Europe appears to be faltering
  • In the United States, a solid recovery seems to be back on track
  • Stronger growth in the second quarter has brought GDP to almost exactly the level the Bank had projected in July’s MPR
  • An increasing number of export sectors appear to be turning the corner toward recovery, this pickup will need to be sustained before it will translate into higher business investment and hiring
  • Full text of the Bank of Canada statement

The Bank of Canada took a victory lap on CPI and its growth forecast but the important points are the optimism on US growth and the export sector. The Canadian dollar is about 25-pips higher right across the board. Hope you read our BOC preview.

A better tone isn’t largely priced in and comments designed to weaken the Canadian dollar are unlikely. Bias toward Canadian dollar longs.