USD/CAD flows: BoC looking through inflation, watching risks
Unchanged with outlook presented in conditional terms
Core stance though is to look through inflation while being more on guard against downside risks especially from US trade deal renewal
Latter remains the main near-term risk for the CAD
No great surprise from the BoC leaving policy unchanged and saying that, for now, it continues to look through look through the war's near-term impact on headline inflation, though will not allow it to become generalised (in that scenario consecutive hikes may be needed).
Employment has been volatile but flat since Jan. Notes that, for now, unchanged balances the growth and inflation risks. While adding that if US imposes significant new trade restrictions may need to cut rates.
Overall, strikes a balanced conditional stance as you would expect but overall lean is defensive and so a touch dovish with the current skew seeming to focus more on downside risk possibilities than upside as things stand. The US tariff issue is of course the most pressing issue for Canada and the CAD as the deadline rolls in.