BoC rate cut by 25bps to 0.50%

The BoC's justification for the rate cut was on the back of a notably lower growth profile and greater downside risks to inflation compared to their April round of forecasts. H1 was clearly a disappointment to the Bank, with the biggest surprises being the larger declines in energy sector capex and the puzzling lack of pickup in non-energy export growth. 

After the cut, they now look for a closure of the output gap in 'H1 2017', and for inflation to rise more sustainably toward 2% by that time as well. Their adjusted forecasts and comments in the statement leave a more cautious tone, but the upshot is that with this updated outlook, they expect the output gap to close within their 2 year policy horizon. That is a similar signal to the January cut. ie. They are not ruling out another cut, but that they are currently in 'wait and see' mode.