-- As expected, the Bank of Canada "stayed put", holding its policy rate at 2.25%, maintaining the level it has kept in place since October, TD Economics noted Wednesday.
TD in looking at the key implications of today's BoC updates noted inflation readings are due to pick up as the energy shock gradually propagates through the economy. But, TD also noted, they are "starting from a good place" as near-term measures of core inflation have trended well within the target range, and the labour market has remained soft. These factors underpin a softer starting point for inflation and the risks the BoC is looking to confront, it said.
"From our lens," TD added, "the outlook has only gradually shifted. The BOS survey suggested some upside to business confidence, but the outlook for firms remains very murky. The worry is what happens with energy prices. Our expectation (like the BoC's) is that prices peak this quarter and gradually fall, taking pressure off inflation and allowing the BoC to stay on hold at the lower end of their neutral range. Of course, the risks to the outlook [at] high, and remain contingent on the course of the Middle East conflict."