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The Bank of Canada (BOC) kept the overnight rate at 0.50% and the Loonie spiked and continued to appreciate against its forex rivals.

It even decoupled from sliding oil prices, as you can see on the chart below.

What’s up with that? Well, after digging around in the BOC’s press statement, press conference, and monetary policy report for clues, here are 6 key points from the July BOC Statement

USD/CAD vs. Oil (Inverted): 15-Minute Forex Chart
USD/CAD vs. Oil (Inverted): 15-Minute Forex Chart

1. Global growth forecasts downgraded, but…

BOC Global Projections

The BOC downgraded its global growth projections, thanks mainly to the expected deterioration in trade and investment outflows from the U.K. and the Euro Zone due to the Brexit referendum, as well as China’s sharper-than-expected slowdown due to “weakness in net exports and, to a lesser extent, a drag from softer investment in fixed assets in the manufacturing sector.”

The U.S., Canada’s main trading partner, is still growing within expectations, though, so the “impact on the level of Canadian GDP over the projection period is likewise anticipated to be modest, about -0.1 percent, reflecting, among other factors, Canada’s small direct trade exposure to the UK (which is a destination for only 3.5 percent of Canadian exports).”

2. GDP down in Q2, but will bounce back in Q3

BOC Economic Projections

The BOC warned that Q2 GDP likely contracted by 1% quarter-on-quarter (+1.0% original forecast), and it blamed the slowdown on “volatile trade flows, uneven consumer spending, and the Alberta wildfires.”

On a more upbeat note, Q3 GDP is expected to pick up considerably by 3.5% (+2.2% original forecast) because of the expected resumption in oil production, as well as the planned rebuilding efforts in Alberta and Canada Child Benefit, which will support consumption.

The slowdown in Q2 forced the BOC to downgrade its GDP growth projections for all of 2016 from 2.2% to 1.9%, though.

3. Inflation projections upgraded

BOC Economic Projections

On the brighter side of things, the BOC upgraded its inflation projections for 2016 and 2017 to 1.8% (1.5% originally) and 2.1% (2.0% originally) respectively. The upgrades were attributed to the rise in oil prices, the pass-through effect of Loonie’s past deprecation, and expectations that the output gap will close. And while there are risks to the BOC’s inflation outlook, these are balanced… for now.

4. BOC is worried about the housing market

The BOC noted that “Recent housing market developments, particularly in Vancouver and Toronto and adjacent areas have exacerbated vulnerabilities in the household sector, increasing the likelihood and severity of a retrenchment in consumption should a house price correction occur.”

In short, the BOC is worried about a housing bubble. The BOC is anticipating that residential investment will slow down soon, though, which would decrease or at least stabilize vulnerabilities in the housing market.

5. No direct jawboning

The BOC didn’t try to talk down the Loonie, but it implied that a weaker Loonie is desirable when it said that “the past depreciation of the Canadian dollar will continue to support non-commodity exports.” The BOC also said that it assumes that the exchange rate will average at around 77 U.S. cents per Loonie (or USD/CAD at about 1.2987 or so) for its outlook.

6. Neutral tone overall

The BOC opted to maintain the overnight rate at 0.50%. And while that was expected, the fact that it did gave forex traders some relief, causing the Loonie to appreciate. It also turns out that the BOC’s tone was rather neutral.

For starters, the BOC shrugged off the Brexit vote, saying that the effect on the Canadian economy wouldn’t be too great. And while the BOC admitted that Q2 was a disaster because of the Alberta wildfires, it presented an optimistic face by saying that a rebound is expected in Q3. Other rather upbeat statements include the upgraded inflation projections.

Given all that, as well as the BOC’s worries over the housing market, the implication seems to be that the BOC is not in the mood to ease further, which also likely boosted demand for Loonie.