The Bank of Canada made a surprise move today, raising interest rates by 0.25% to 1% for the second time in a row this year. Expectations were that the bank would keep interest at 0.75%. A monetary policy report wasn't released after today's meeting and there was no press conference.
According to the BOC rate statement, the recent economic data was stronger than expected, supporting the Bank's view that growth is becoming more sustainable. The bank expects growth to slow but the level of GDP is higher than expected.
The CPI rose slightly in addition to the core inflation of the bank, in line with the absorption of the economic recession. However, there is still some stagnation in the labor market while wages and prices are still having subdued growth.
The Canadian dollar rose strongly after the decision, as the USDCAD fell strongly to the level of 1.2136 the lowest level over more than two years, while the CADJPY rose to its highest level in more than a year and a half at 89.75.
