The Bank of Canada raised interest rates by 25bp to 0.75 percent, their second move this summer. Although the rate hike has made Canada the most aggressive member of the G7, the Canadian dollar did not rally because policymakers went out of their way to send a strong message to the market that further rate hikes are not a given. Each hike has and will continue to be "weighed carefully" as the BoC responds to market developments. They have no plans to raise rates 3 times in a row because their decision will be based purely on how the financial markets and the Canadian economy performs over the next 7 weeks.

The central bank even went one step further and revised down their 2010 to 2011 growth forecasts, erasing any positive connotations from their announcement. The Canadian economy is now expected to grow 3.5 percent this year compared to a prior forecast of 3.7 percent. Their 2011 growth forecast is now for an expansion of 2.9 percent, down from 3.1 percent. Last month, the unemployment rate dipped to 7.9 percent, which was the primary reason why the Bank of Canada was motivated to raise interest rates, but beyond that, there have signs of weakness in other parts of the Canadian economy. According to the monetary policy statement concerns about Europe have eased but weaker consumer consumption, business investment, and housing could is expected to cut growth.

With interest rates still below 1.00 percent, there is question "considerable stimulus remains" and that monetary policy is at emergency settings. Yet the clear message to take away from today's announcement is that the BoC is in no rush to raise interest rates.