There were no tantalizing tidbits in the Bank of Canada's rate announcement on Tuesday, but even as the central bank held rates steady at 1 per cent any future move will likely be higher.
Despite weaker-than-expected domestic economic data and nagging worries about the U.S. fiscal cliff, the bank kept its message that "over time" it may need to raise its key lending rate.
"Over time, some modest withdrawal of monetary policy stimulus will likely be required, consistent with achieving the 2 per cent inflation target," the Bank's statement said.
"The timing and degree of any such withdrawal will be weighed carefully against global and domestic developments, including the evolution of imbalances in the household sector."
As expected, the Bank of Canada kept its key overnight interest rate steady at 1 per cent, where it has been for two years. It's the longest stretch the rate has been frozen since the early 1950s.
There had been some speculation in the market that the central bank may change or drop any references partly due to recent data that showed Canada's economy grew at a meager 0.6 per cent in the third quarter. As well, some had hoped for clues on the bank's thinking with regard to household debt and housing.
"Despite a raft of disappointing data of late, the Bank has not blinked on their bias ..." Doug Porter, deputy chief economist at BMO Capital Markets, said in a note.
"Still, this is a bit of a softer statement, in that Q3 growth 'was weak', core inflation will take a bit longer to get back to target, housing 'is beginning to decline', and the fiscal cliff concerns loom."
Economists, bond and currency specialists hang on every word made by the Bank of Canada to get clues on whether it will raise or slice its key rate.
Rates have held at 1 per cent since September 2010. But the Bank of Canada bucked the broader global trend earlier this year by signaling it may need to hike rates, taking a slightly more "hawkish" stance, rather cutting or holding a "dovish" view.
The bank's overnight rate is the target one-day interest rate it sets for financial institutions to borrow or lend among themselves. It is intensely scrutinized as it influences other interest rates that affect consumer loans and mortgages, as well as possibly affecting the exchange rate of the Canadian dollar.
That's why language is so important.
"The Bank of Canada will try to signal any change so that doesn't come as a complete shock," said Camilla Sutton, chief currency strategist at Scotiabank, who characterized Tuesday's announcement as "steady as she goes" and "vaguely hawkish."
"The market searches for signals that something might be changing from the Bank of Canada's viewpoint."
Bank of Canada Governor Mark Carney, who recently surprised the world when he announced he will head the Bank of England starting July 2013, sent the market in a tizzy in October when he sent a signal that was perceived as being a touch less aggressive on its tightening bias.
Many market players, which don't see the bank swaying on interest rates until later next year, will look to a January forecast update for more market clues.