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The Bank of Canada held interest rates steady on Wednesday, as expected, but said more hikes will be needed over time and pointed to a pick up in wage growth and inflation, two issues that have concerned the central bank.

It has increased rates three times since July 2017.

“We think the bank is on track to raise rates by July,” said Sal Guatieri, senior economist at BMO Capital Markets.

“Clearly any bad news on the trade protectionism front or NAFTA talks would delay the Bank of Canada or if we see the housing market weakening more than expected in response to the tougher mortgage rules,” Guatieri added.

The Canadian dollar weakened slightly against its U.S. counterpart as some investors had bet on a surprise hike or more hawkish language from policymakers, but the currency could regain some strength as markets digest the full monetary policy report that accompanied the rate decision.

“I think the statement will be read as making clear that further rate hikes are probably going to be needed over the course of this year, and with that some modest strength (in the Canadian dollar) could emerge,” said Paul Ferley, assistant chief economist at Royal Bank of Canada.

The bank reiterated that policymakers “will remain cautious” with respect to future rate moves as it watches to see how Canada’s highly indebted households manage the higher borrowing costs.

While the bank trimmed its economic growth forecast for 2018 it hiked the outlook for 2019, saying the economy is operating with little slack and the temporary factors weighing on inflation have largely dissipated.

Projected growth in the United States, Canada’s largest trading partner, has been boosted by government spending plans, but the bank said rising geopolitical and trade conflicts risk undermining global expansion. The renegotiation of NAFTA prompted by U.S. President Donald Trump has weighed on business confidence and delayed investment.

The bank said exports will strengthen as demand increases, but said growth is increasingly being limited by capacity constraints. Exports and investment to build capacity are being held back by competitiveness challenges and trade worries.

While changes in mortgage rules pulled forward housing activity to late 2017 and exports faltered in the first quarter on transportation bottlenecks, the weakness in both are expected to unwind, the bank said.