(Adds market reaction, economist comment)
ST. JOHN'S, Newfoundland, Sept 27 (Reuters) - There is no predetermined path for interest rates from here and future moves from the Bank of Canada will be particularly data-dependent, Governor Stephen Poloz said on Wednesday.
Striking a cautious note and listing uncertainties facing Canada's economy, Poloz said the central bank will closely watch movements in longer-term interest rates and the exchange rate as it considers how to follow its two recent rate hikes.
"Monetary policy will be particularly data-dependent in these circumstances and, as always, we could still be surprised in either direction," Poloz said in prepared notes for a speech to the St. John's Board of Trade.
"We will continue to feel our way cautiously as we get closer to home, fostering economic growth and keeping our inflation target front and center," Poloz added.
The Canadian dollar weakened to a near four-week low at C$1.2433 to the U.S. dollar, or 80.43 cents, after the speech, as investors bet on a more gradual tightening cycle.
"All told, the majority of the speech confirms our assumptions that tightening from the Bank of Canada will be a gradual affair from here, with our estimate being that the next move will have a 2018 time stamp," Nick Exarhos, economist at CIBC, wrote in a note to clients.
Poloz said several unknowns prevent the bank from thinking mechanically about the outlook for interest rates, including the sensitivity of the economy to higher borrowing costs given elevated levels of household debt.
The governor said that while cutting rates in 2015 was the right thing to do to counter the oil price shock, "at a minimum, that additional stimulus is no longer needed" as Canada's economy approaches the intersection of full capacity and the bank's 2-percent inflation target.
The recent strength of the Canadian dollar, which gained against its U.S. counterpart after the bank's back-to-back rate hikes in July and September, could affect the rate at which factors holding down inflation dissipate, Poloz said.
"Changes in interest rates naturally lead to movements in the Canadian dollar. However, currencies can move for many other reasons, including external factors, and these movements can affect our inflation outlook, depending on their cause, size and persistence," Poloz said.
With a nod to Canada's record-level of household debt and roller-coaster housing market, Poloz said policymakers do not yet have a full picture of how the market has responded to tighter mortgage rules and housing measures. (Additional reporting by Andrea Hopkins and Leah Schnurr in Ottawa; Editing by Chizu Nomiyama)