RBC economists have revised their interest rate forecast in the wake of the Bank of Canada’s surprise rate cut last week.

In a research note, RBC says that it now expects the BoC to stand pat for the rest of 2015, with the overnight rate holding at its new 0.75% level for the rest of the year, “as policymakers wait for the economy to clear the obstacles created by the oil price shock.”

“The BoC’s cautious approach to managing the risks to the economy and inflation suggests that it will take several quarters of above-potential growth before the BoC will begin to raise the policy rate, and we expect the BoC to initiate a series of rate increases in the first quarter of 2016,” it says. It’s now forecasting that the overnight rate will be at 2.0% by the end of 2016.

RBC’s baseline forecast assumes that oil prices will recover somewhat this year, that the economy will grow by 2.7% in 2015, with the core inflation averaging 2.1%, and the unemployment rate declining to 6.3%. “These factors underpin our assessment that the Bank of Canada will not need to cut interest rates further,” it says.

The Canadian dollar is expected to remain under pressure, it says, “Until markets are convinced that no more rate cuts are in the pipeline and that oil prices have bottomed.” That weakness also presents some upside risk to its forecast for export growth and core inflation, it says.