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“If everything turns out perfectly, there’s no rush to suddenly get back in the saddle” and resume raising interest rates, Poloz told reporters. “It’s more a question of letting the data speak,” he added. “Right now, we need some positive data to confirm that this outlook is the appropriate one.”

The value of the Canadian dollar dropped by nearly a penny to roughly 74 U.S. cents, as traders repriced financial assets to match a prolonged period of low borrowing costs. The yield on overnight index swaps now implies that investors are hedging against the possibility of lower interest rates through next year, even though Poloz said the central bank’s outlook implies that odds still favour increases over cuts.

“Although we don’t see an argument for rate hikes at this stage, we also don’t think an outlook that calls for continued low unemployment and near two-per-cent inflation warrants a reversal of the BoC’s recent moves,” said Josh Nye, an economist at Royal Bank of Canada, who correctly predicted that the central bank would back away from raising the policy rate this year.“Our forecast assumes the overnight rate will be held at 1.75 per cent through next year, so expect more steady rate decisions in the months ahead.”

Canada’s economy was cruising at the start of the last year when a plunge in oil prices, higher interest rates, and U.S. President Donald Trump’s trade wars converged to create a torrent of headwinds.

Gross domestic product was growing at an annual rate of two per cent in the third quarter, then decelerated to rates of 0.4 per cent in the fourth quarter and 0.3 per cent in the first three months of this year, according to the central bank’s new quarterly Monetary Policy Report (MPR).