The central bank raised its benchmark interest rate by 25 basis points to 1.25 percent, as expected, after recent data showed strong job growth and firmer inflation.
Led by RBC, all of the big banks have now hiked their posted rates since last week by up to 20 bps on fixed terms.
But the "balanced tone" of a press conference with Bank of Canada Governor Stephen Poloz and Senior Deputy Governor Carolyn Wilkins helped the currency recover, said Eric Theoret, currency strategist at Scotiabank.
While the economic outlook is expected to warrant higher interest rates over time, some continued monetary policy accommodation will likely be needed to keep the economy operating close to potential and inflation on target.
The global economy continues to strengthen, with growth expected to average 3 1/2 per cent over the projection horizon.
Poloz raised rates in July and September in response to a surprisingly strong economic run that began in late 2016.
The central bank pointed to unexpectedly solid economic numbers as key drivers behind its decision to hike the rate to 1.25 per cent, up from one per cent. By making NAFTA risks so prominent in this Statement, rate hike odds will now ebb and flow with the negotiations, even moreso than earlier. We concur with the Bank's assessment that "some accommodation will likely be needed to keep the economy operating close to potential and inflation on target" and we believe that the Bank will need to slow the pace of rate hikes in 2019 (we now have the overnight rate holding at 2.25%, below the 3.00% mid-point of the Bank's estimated neutral rate range, largely reflecting the impact of higher rates on high household debt).
Former England footballer Cyrille Regis dies aged 59
Regis won five caps for England between 1982 and 1987, having been one of the stars of the Baggies team between 1977 and 1984. Regis, who retired from his playing career in 1996, was awarded an MBE in 2008 for his charity work and services to football.
However, the bank expressed growing concern about the future of the North American Free-Trade Agreement (NAFTA), which will hold its sixth round of talks in Montreal next week. While the move means borrowers can expect to pay more, savers can expect to earn more, too, on savings accounts and guaranteed investment certificates.
The threat of greater protectionism remains the most significant risk to Canada's export-dependent economy, the bank said.
Economist Frances Donald with Manulife agrees with that assessment, telling CBC News in an interview that while the market was expecting as many as three hikes this year, the situation is fluid.
"We can't just relax and assume that it would be a small shock", he said.
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