Risks identified by BoC in its FSR remain largely unchanged relative to the Dec report

The Bank of Canada published its semi-annual Financial System Review (FSR) this morning. The Bank of Canada's song remained largely the same today, with the identified vulnerabilities and risks to the Canadian financial system being essentially unchanged since the December FSR.

TD Economics said "The implications of today's FSR are nil for our view that the Bank of Canada will keep rates on hold until the end of 2016." If anything, while the oil price shock increased the vulnerability of the Canadian financial system to risks, the January rate cut amplified it in some parts of the country. That's not to say it was misguided but suggests that the Bank is unlikely to cut rates again given its concern about risks to the Canadian financial system.

The recent Canadian economic data for Q2, from exports and employment to oil prices and housing market activity, also point to an economy on the mend, causing us to lean against the likelihood of another rate cut, adds TD Economics