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ING Notes Muted Market Reaction to Bank of Canada's Hold Decision, MPR

BY MT Newswires | ECONOMIC | 11:21 AM EST

11:21 AM EST, 01/28/2026 (MT Newswires) -- The Bank of Canada has held its target for the overnight rate at 2.25% on Wednesday, as widely expected, said ING.

The BoC's Monetary Policy Report forecasts 1.1% gross domestic product growth this year and 1.5% in 2027, which is broadly in line with how the MPR saw things back in October, noted the bank.

The reaction in USD/CAD was "quite contained," stated ING. The BoC is leaving options on the table, and the bank pointed out it wouldn't be shocked by another cut this year, but there is simply not enough in communication to steer market pricing decisively at this point.

USD/CAD remains "overwhelmingly" driven by the US dollar (USD) leg, according to the bank. ING isn't convinced in following the selloff in USD much further, and in its view, short-term risks are tilted on the upside for USD/CAD.

Potentially "rocky" USMCA trade renewal negotiations ahead are a key reason why the bank believes the Canadian dollar (CAD or loonie) remains more vulnerable than other G10 currencies. ING's tactical view is a return above 1.370 in the pair.

MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.

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