{"id":529449,"date":"2026-07-16T18:53:25","date_gmt":"2026-07-16T18:53:25","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/529449\/"},"modified":"2026-07-16T18:53:25","modified_gmt":"2026-07-16T18:53:25","slug":"the-boc-holds-at-2-25-and-removes-hike-language-why-the-canadian-dollar-could-remain-stuck","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/529449\/","title":{"rendered":"The BoC holds at 2.25% and removes hike language: Why the Canadian Dollar could remain stuck"},"content":{"rendered":"

The Canadian Dollar (CAD) has entered a consolidation phase against the US Dollar (USD) following a volatile week. While a soft US inflation report initially put the Greenback on the back foot, the Bank of Canada’s (BoC) decision to keep its interest rate at 2.25% for a sixth consecutive meeting has somewhat tamed the initial downward move in the USD\/CAD<\/a> pair.\u00a0<\/p>\n

Institutional analysts are closely examining the Canadian central bank’s updated forecasts and shift in guidance to map out the next directional leg for USD\/CAD.<\/p>\n

\"\"USD\/CAD daily chart. Source: FXStreet.Cooling growth and excess supply challenge aggressive hike pricing<\/p>\n

BBH emphasizes that Canada\u2019s cooling economic momentum suggests that the central bank is in no rush to pursue further interest rate hikes. Under updated projections, real GDP<\/a> growth is expected to decelerate from an annualized 2.5% in the second quarter to a more modest 1.5% in the third quarter.\u00a0<\/p>\n

With core inflation comfortably hovering around 2%, current market expectations of 50 basis points of policy tightening over the next 12 months appear highly overextended.<\/p>\n

There is room for BoC rate hikes bets (50bps in the next twelve months) to adjust lower against CAD as the Canadian economy remains in excess supply.<\/p>\n

Softened BoC guidance limits immediate Loonie catalyst<\/p>\n

The macro research team at TD Securities points out that the BoC\u2019s newly watered-down forward guidance offers little spark to ignite a Canadian Dollar rally. By stripping out previous references to both rate-cut risks and back-to-back rate hikes, the central bank has presented a highly balanced neutral stance. While this balanced outlook<\/a> prevents sudden currency swings, it leaves the Loonie lacking a clear domestic policy catalyst to push past its current boundaries.<\/p>\n

The Bank of Canada held rates at 2.25% and watered down its guidance by removing the reference to both the risk of rate cuts and consecutive hikes going forward (…) A balanced BoC outlook does not do much for the CAD.<\/p>\n

Near-term holding pattern close to 1.4000<\/p>\n

The banks project a highly consolidated near-term trajectory for USD\/CAD, with a gradual downward bias. Both institutions observe that the currency cross is stabilizing in the wake of benign US CPI and PPI reports, highlighting that a downward repricing of BoC rate hike bets will temporarily limit the CAD’s relative yield advantage. However, TD Securities remains constructively optimistic over a wider horizon, concluding that as Canadian economic data begins to form a stable base, USD\/CAD will eventually retrace below the psychologically important 1.4000 threshold.<\/p>\n

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more<\/a>.)<\/p>\n","protected":false},"excerpt":{"rendered":"The Canadian Dollar (CAD) has entered a consolidation phase against the US Dollar (USD) following a volatile week.…\n","protected":false},"author":2,"featured_media":529450,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[138,219,111,139,69],"class_list":["post-529449","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-new-zealand","tag-newzealand","tag-nz"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/529449","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=529449"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/529449\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/529450"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=529449"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=529449"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=529449"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}