By William L. Watts
NEW YORK (MarketWatch) -- The Bank of Canada, as expected, left its overnight rate target unchanged at 1% on Wednesday, while continuing to signal that the next policy move will likely be toward tighter monetary policy once the economic backdrop returns to normal. "As long as there is significant slack in the Canadian economy, the inflation outlook remains muted, and imbalances in the household sector continue to evolve constructively, the considerable monetary policy stimulus currently in place will remain appropriate. Over time, as the normalization of these conditions unfolds, a gradual normalization of policy interest rates can also be expected, consistent with achieving the 2% inflation target," the bank said in its policy statement. The U.S. dollar USDCAD -0.48% fluctuated versus its Canadian counterpart in the wake of the announcement, but remained lower on the day and within its trading range. The U.S. unit fetched 1.0498 Canadian dollars, down 0.4% from Tuesday.
