25 January 2017

It also raised its forecasts on the economic growth for 2018 and 2019. Now the BoC expects a 2.2% increase this year and a 1.6% gain in 2019. Earlier, it was 2.1% and 1.5%, respectively.

Although the general tone of the economy’s forecasts is quite positive, the Bank points to uncertainty around NAFTA as a strong reason for worries.

Poloz admits that the Banks depends on NAFTA greatly, but he says it’s impossible to predict how the BoC will react in case the negotiations fail or the deal faces significant changes.

“If the economy started slowing after that, then we could put those pieces together, the inflation target would be affected, and we’d return to rate cuts. However, there are many things which could change,” – Poloz said.

The central bank’s next rate meeting is scheduled for March 7, but markets don’t bet on a rate increase too much with only a 27.7% probability. Meanwhile, the number goes up to 95% for a hike at the end of the year.

The governor didn’t comment on the loonie, which showed a sharp gain on Wednesday after the U.S. Treasury Secretary Steven Mnuchin said that weaker greenback had a positive impact on U.S. trade.