James Smith, Economist at ING, considers that despite today’s statement, the Bank of Canada may ultimately adopt a more dovish bias. According to them the risk of a rate cut later this year still exists. Key Quotes: “The Bank of Canada has kept rates unchanged at 0.5% as widely expected and the statement remained broadly unchanged from the last meeting.” “Given that the CAD had strengthened around 9% since January’s meeting, we are slightly surprised that we didn’t see a more pronounced dovish shift. Incidentally, we suspect that this is the BoC’s lower bound for CAD strength.” “In reality, the BoC may have wanted to wait until the Federal Budget is announced on 22nd March. Indeed, there is a reference to this in the statement which states that the effect of any fiscal measures will be incorporated into the April projections.” “The risks to Canadian growth are unlikely to completely disappear in the near-term. The longer oil prices remain relatively low, the higher probability there is that the damage to the energy sector spreads through to the wider economy. As such, we still think that the BoC may ultimately adopt a more dovish bias and the risk of a rate cut later this year is still there.” For more information, read our latest forex news.