Bank of Canada rate decision leaves rates unchanged, as expected

• Prior was 2.75%
• The market was pricing in a 42% chance of a cut and 58% chance of no change
• A slight majority of economists were expecting no change
• There is also an unusual degree of uncertainty about the economic outcomes within any tariff scenario
• Tariffs and uncertainty have weakened the outlook for global growth
• Extreme market volatility is adding to uncertainty
• The Canadian economy is slowing as tariff announcements and uncertainty pull down consumer and business confidence
• Consumption, residential investment and business spending all look to have weakened in the first quarter
• Businesses are reporting plans to slow their hiring
• Our focus will be on ensuring that Canadians continue to have confidence in price stability through this period of global upheaval

The guidance from the Bank of Canada offers a hawkish bent, despite a statement filled with downbeat comments on growth.

"Monetary policy cannot resolve trade uncertainty or offset the impacts of a trade war. What it can and must do is maintain price stability for Canadians."

USD/CAD is down to 1.3883 from 1.3920 on the kneejerk reaction. I suspect this will get unwound in time if it looks like Canada is headed for a bleaker growth outcome. The latest jobs report was poor and another one would indicate that 2.75% rates are too high. The housing market is also cracking.