BOC Meeting Minutes: Sees future rate adjustments would likely be small.
Lead — The Bank of Canada's recent meeting minutes suggest a cautious approach to future rate adjustments, with policymakers indicating that any changes would likely be minor. Per the full note source, the BOC is navigating a complex landscape marked by rising oil prices and geopolitical uncertainties, which are contributing to inflationary pressures. Despite these challenges, the Canadian economy is showing resilience, supported by consumer spending and government activity. However, the BOC remains vigilant, prepared to adjust its stance if inflation broadens beyond energy-driven shocks.
What the desk is arguing
The desk interprets the BOC's stance as one of cautious optimism, emphasizing the bank's view that future rate adjustments will be limited. This perspective is underpinned by the recent inflation rise being primarily energy-driven, as highlighted in the meeting minutes. The BOC's decision to maintain the policy rate at 2.25% reflects a balance between addressing inflation pressures and supporting economic growth.
Supporting evidence includes the BOC's expectations for GDP growth to gradually improve, with forecasts of 1.2% for 2026 and 1.6% for 2027. The bank acknowledges that while inflation may temporarily rise toward 3%, it anticipates a return to the 2% target as oil prices stabilize. This nuanced outlook suggests that the BOC is prepared to act if inflationary pressures become more persistent.
The alternative read would be that the BOC could face pressure to raise rates more aggressively if inflation expectations shift significantly, particularly given the recent spike in oil prices and its potential impact on broader economic conditions.
Where it sits in our coverage
Our consensus target for USD/CAD is 1.075, with a range of 1.04 to 1.12. This aligns with targets from several firms, including: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26) - citi: 1.08 (Mar26)
The desk's view is slightly above the consensus target, indicating a more cautious stance on the Canadian dollar's strength relative to the US dollar. This positioning reflects the desk's belief that the BOC will maintain a steady course unless inflation pressures necessitate a shift.
How other firms see it
Firms aligned with our view include jpmorgan and citi, both projecting modest strength in USD/CAD as they anticipate a gradual recovery in the Canadian economy. Conversely, bofa takes a more bearish stance, suggesting a lower target based on concerns over trade uncertainties and inflation dynamics.
Watch for the USD/CAD movement as it interacts with the BOC's monetary policy, particularly in light of the evolving geopolitical landscape and its implications for commodity prices.
What the calendar says
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USD/CAD — All Desk Targets
| Firm | Stance | YE 2026 |
|---|---|---|
Scotiabank | Bullish | 1.40 |
Bank of America | Bullish | 1.35 |
UBS | Bullish | 1.34 |
The BOC Meeting meeting minutes are out for the April 29 meeting. International economy Middle East war increased uncertainty, pushed oil prices sharply higher, and added to global inflation pressures. US economy remained relatively solid with resilient consumer spending and continued AI investment, although hiring stayed soft.
China’s economy was viewed as relatively insulated near term, supported by strong exports. Euro area growth was expected to weaken due to higher energy costs and supply concerns. Policymakers noted that financial markets had remained surprisingly resilient despite geopolitical risks.
Commodity prices and financial markets Oil prices above $100 were a major focus, with the Bank assuming prices would eventually ease but acknowledging high uncertainty. Higher energy prices also lifted some commodity and food prices. Bond yields moved higher, while the US dollar strengthened against most major currencies.
The Canadian dollar remained relatively stable near 73 US cents. Canadian economy Growth was expected to resume after a weak end to 2025. Consumer and government spending were supporting activity, while trade uncertainty continued to weigh on business investment and exports.
Business sentiment improved modestly despite tariff uncertainty. Members viewed the economy as showing better resilience than feared. Housing market Policymakers discussed ongoing housing market weakness.
High uncertainty, affordability problems, slower population growth, and lower investor demand were seen as weighing on housing activity. The Bank believes rebalancing the housing market will take time. Labour market The labour market remained soft but stable.
Job growth slowed and hiring remained weak. The unemployment rate stayed in a 6.5%–7.0% range. Slower population growth and aging demographics were also affecting labour force growth.
Inflation outlook Inflation had been near the 2% target for over a year before rising due to higher gasoline prices. Policymakers saw the recent inflation rise as mainly an energy-driven shock. Core inflation measures were still showing easing underlying pressures.
Food and rent inflation remained elevated. Long-term inflation expectations were viewed as well anchored. Growth and inflation forecasts GDP growth was expected to gradually improve through 2028.
Inflation was expected to temporarily rise toward 3% before returning to 2% as oil prices ease. The Bank continued to expect modest overall growth despite geopolitical risks. Risks and uncertainty The two biggest risks were: US trade policy and tariffs The evolving Middle East conflict Policymakers stressed that both risks could materially affect growth and inflation.
Sources & References
How we cover this story
Cross-firm research
USD/CAD Week of Aug 8 2026: Spot at 1.3940, Consensus at 1.35
USD/CAD trades at 1.3940, roughly 3.26% above the 25-firm Dec-2026 median of 1.35, with a 0.11 spread separating Citi from Deutsche Bank.
USD/CAD Consensus Check: Spot at 1.4018 vs 1.35 Target, Week of Aug 7 2026
USD/CAD trades at 1.4018, roughly 3.84% above the 25-firm Dec-26 median of 1.35, with a 0.11 range separating the most and least bearish desks.
USD/CAD Consensus Check: Spot at 1.3997 vs 1.35 Target, Week of August 6, 2026
USD/CAD trades at 1.3997, roughly 3.68% above the 25-firm Dec-2026 consensus median of 1.35, with a 0.11 dispersion range signalling meaningful disagreement on the policy gap.