The Bank of Canada kept interest rates unchanged as expected at .25% BUT they dropped their “conditional commitment” to keep it unchanged through June as “global economic growth has been somewhat stronger than projected, with momentum in emerging market economies increasing noticeably.” They said the recovery in Canada is “proceeding somewhat more rapidly than they projected in Jan.” Thus, with the recent improvements in the economic outlook, the “need for such extraordinary policy is now passing, and it is appropriate to begin to lessen the degree of monetary stimulus” with the extent and timing depending on the economic outlook and inflation. With the next meeting on June 1st, the BoC is leaving open the possibility that they raise rates before then but at least will likely raise rates on that date. In response the Canadian $ is rallying back to parity vs the US$.
