The Bank of Canada (BoC) announced on Wednesday that it left the benchmark interest rate unchanged at 4.5% following the March policy meeting. This decision came in line with the market expectation. 

In its policy statement, the BoC reiterated that it expects to hold the key rate at its current level, conditional on the economy developing broadly in line with its forecasts.

Market reaction

USD/CAD edges slightly higher as investors assess the BoC's policy announcements. As of writing, the pair was trading at its highest level since early November, rising 0.2% on the day at 1.3778.

Key takeaways from the policy statement

"Latest economic data remain in line with bank's expectation that overall inflation will come down to around 3% in the middle of this year."

"Prepared to increase policy rate further if needed to return inflation to 2% target."

"Labor market remains very tight, employment growth has been surprisingly strong."

"Price increases for food and shelter remain high, causing continued hardship for Canadians."

"Restrictive monetary policy continues to weigh on household spending."

"Weak economic growth over the next couple of quarters means pressures in product and labor markets are expected to ease."

"Strength of China's recovery and impact of Russia's war in Ukraine remain key sources of upside risk to forecasts for commodity prices."