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USD/CAD stays near one-month low after BoC rate decision
The Bank of Canada kept its policy rate at 2.25%, while it lowered its 2026 growth forecast to 0.7% and raised its 2026 inflation projection to 2.5%.
USD/CAD traded roughly flat on Wednesday, holding near a one-month low around 1.4051 after the Bank of Canada left its policy rate unchanged at 2.25%, as FXStreet reported. The limited reaction came even as the BoC maintained that the current rate remains appropriate to support Canada’s recovery and bring inflation back toward its 2% target.
In its monetary policy statement, the BoC said uncertainty remains high and it would continue assessing the strength of the Canadian economy and the inflation outlook. It also reiterated that policymakers are prepared to adjust interest rates if needed, while flagging US trade policy and the war in the Middle East as the two biggest risks to the outlook.
FXStreet added that the BoC cut its 2026 economic growth forecast to 0.7% from 1.2% and estimated second-quarter growth at an annualized 2.5%, followed by 1.5% in the third quarter. The central bank also raised its 2026 inflation projection to 2.5% from 2.3% and expects inflation to return to 2% by early 2027.
On the US side, softer-than-expected Producer Price Index data weighed on the US dollar, but USD/CAD still moved little because Canada did not fully capitalize, leaving the pair broadly unchanged. FXStreet said the US PPI declined 0.3% month over month in June, with annual producer inflation slowing to 5.5% from 6.0%, and that traders were looking ahead to BoC Governor Tiff Macklem’s post-meeting press conference for further guidance.