The Canadian dollar is surging after the Bank of Canada said it might not have to cut rates again

A further easing from the Bank of Canada would bring the central bank closer to unconventional monetary policy and the decision on whether to cut rates again is not one to take lightly, Governor Stephen Poloz said on Monday.

Taking questions from lawmakers, Poloz also said that there were ingredients of a possible divergence between Canada and the United States, both economically and from a monetary policy standpoint. Some expect the U.S. Federal Reserve may raise rates before the end of the year, while the Bank of Canada is widely expected to stay on the sidelines until into 2018.

The Canadian dollar soared after the remarks from Poloz. Per US dollar, the loonie strengthened to 1.3291, by -0.34%.

Poloz said monetary policy is less effective when interest rates are low, and uncertainties keep the bank from easing rates any further. The benchmark overnight rate is currently at 0.5%.