The central bank left its benchmark interest rates on hold at 1 percent, as expected. Despite rising employment and participation rates, other indicators point to ongoing - albeit diminishing - slack in the labor market, the central bank said.

Investors had been interested in how the Bank of Canada would characterize the labor market after data on Friday showed a much stronger-than-expected jobs gain in November.

"I think on balance their overwhelming focus remain on the uncertainties so they provided no clue of a rate hike anytime soon," said Derek Holt, head of capital markets economics at Scotiabank.

Chances of a rate hike in January fell to 28 percent from 41 percent before the announcement, the overnight index swaps market indicated.