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Tomorrow at 2:00 pm GMT we’ll see the Bank of Canada (BOC)’s policy decision for the month of April.

Will the central bank still be concerned over trade policy developments? Or will it see a brighter picture ahead? Here are points you need to know if you’re planning on trading the event:

What happened last time?

The BOC kept its interest rates at 1.25% as markets had expected. But in its March statement, BOC hinted that though economic outlook points to higher rates over time, “continued policy accommodation” is still needed to maintain momentum for inflation.

And why not? Growth wasn’t too hot in Q4 2017 thanks to higher imports and slower-than-expected recovery in exports.

As for the jobs market, the BOC mentioned that “wage growth has firmed, but remains lower than would be typical in an economy with no labour market slack,” adding that temporary factors are causing inflation to fluctuate.

What really caught investors’ attention was the BOC’s apparent concern over trade policy developments (read: Trump’s NAFTA plans). Specifically, the central bank has now acknowledged that they’re an “important and growing source of uncertainty for the global and Canadian outlooks.

How did the Loonie react?

Fortunately for the Canadian dollar, BOC’s surprising concern over trade matters were overshadowed by news that Trump might exempt its neighbors (like Canada) from Uncle Sam’s stiff steel and aluminum tariffs (he eventually did).

CAD 1-Hour Forex Charts
CAD 1-Hour Forex Charts

The Loonie found support from the week’s lows before it ended the week higher than its open price.

What are market players expecting this time?

After raising rates twice last year and once this year, analysts are expecting the BOC to sit on its hands and keep its rates at 1.25% for a third month in April.

Recall that Canada’s GDP dipped slightly in January while higher interest rates had weighed on home sales and are threatening consumption habits of minimum-wage earners. Of course, it also doesn’t help that a net of about 40,000 workers had lost their jobs so far this year.

On the other hand, inflation IS getting uncomfortably close to the upper band of the BOC’s 1% – 3% target range (it stood at 2.2% in February) so Governor Poloz and his team can’t afford to wait too long.

Still, if we take cues from Poloz’ recent speeches, it sounded as if they won’t mind higher inflation just yet.

See, between the weak spots in Canada’s economy and uncertainty around NAFTA and global trade war negotiations, BOC members have plenty of room to wait before they make any more policy changes.

Does this mean that the BOC will continue to believe that “monetary policy accommodation will likely be needed?”

Take note that the central bank will publish its quarterly monetary policy report at the same time as the statement, while Governor Poloz will conduct a presser at 3:15 pm GMT.

Keep an eye out for any changes in the central bank’s estimates, as they could give clues on whether or not the economy has improved from the last time BOC raised its rates in January.

Oh, and don’t forget to keep your eyes peeled for thoughts on “trade policy developments” as well as recent moves in crude oil prices!