The Bank of Canada also left interest rates unchanged on Wednesday, as expected, said Commerzbank.
At the same time, the BoC governor emphasised that a policy rate close to the current level is likely to be appropriate for the foreseeable future, writes the bank in a note to clients.
As with its counterparts at other G10 central banks, the BoC naturally highlighted the risks associated with the oil price shock, although Canada, being a net energy exporter, is in a different position to the European Central Bank or the Bank of England, pointed out Commerzbank.
The Canadian dollar (CAD or loonie) barely reacted to the decision, stated the bank. This is quite understandable, as neither the statement nor the new forecasts offered anything new.
Markets continue to anticipate more than two rate hikes by the end of the year. But given the cautious statements and the fact that the BoC expects only a moderate rise in inflation, Commerzbank continues to anticipate only one rate hike.
The mere prospect of it being easier for the BoC to raise rates is nevertheless likely to provide some support for the CAD in the coming months, according to the bank.