After two rate hikes earlier in the year, one of which caught traders by surprise, moments ago the Bank of Canada announced that it had kept its rate on hold at 1.00% as expected.

Stateing that "the global economy is evolving largely as expected in the Bank’s October Monetary Policy Report (MPR)" the central bank noted that while in the United States, "growth in the third quarter was stronger than forecast but is still expected to moderate in the months ahead." It added that "growth has firmed in other advanced economies. Meanwhile, oil prices have moved higher and financial conditions have eased."

Looking back the data was "in line with October’s outlook, which was for growth to moderate while remaining above potential in the second half of 2017." Employment growth has been very strong and wages have shown some improvement, supporting robust consumer spending in the third quarter. Business investment continued to contribute to growth after a strong first half, and public infrastructure spending is becoming more evident in the data. Following exceptionally strong growth earlier in 2017, exports declined by more than was expected in the third quarter. However,  the latest trade data support the MPR projection that export growth will resume as foreign demand strengthens. Housing has continued to moderate, as expected.

The BOC also noted that it "inflation has been slightly higher than anticipated and will continue to be boosted in the short term by temporary factors, particularly gasoline prices."

Measures of core inflation have edged up in recent months, reflecting the continued absorption of economic slack. Revisions to past quarterly national accounts have resulted in a higher level of GDP. However, this is unlikely to have significant implications for the output gap because the revisions also imply a higher level of potential output. Meanwhile, despite rising employment and participation rates, other indicators point to ongoing­ – albeit diminishing – slack in the labour market

However, while recent BOC announcement have sent the loonie surging, today the Canadian currency tumbled after it reiterated that it "while higher interest rates will likely be required over time, Governing Council will continue to be cautious, guided by incoming data in assessing the economy’s sensitivity to interest rates, the evolution of economic capacity, and the dynamics of both wage growth and inflation."

And another caution: "the global outlook remains subject to considerable uncertainty, notably about geopolitical developments and trade policies."

In immediate kneejerk response, the loonie is lower some 100 pips against the dollar, with the USDCAD rising to 1.2745 at publication time.