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The 90 per cent of the Canadian economy outside of the energy sector barely grew at all over the past year.Mark Blinch/Reuters

The Canadian dollar surged on Wednesday after the Federal Reserve held rates steady and signalled a slower pace of hikes for this year.

The loonie jumped by three-quarters of a U.S. cent in the immediate aftermath of Wednesday's decision, and it continued rising throughout the afternoon. By the close, the Canadian dollar had climbed 1.98 per cent to finish at 76.36 cents (U.S.).

The loonie's gain stemmed from weakness for its cross-border counterpart. The Bloomberg Dollar Spot Index, which tracks the U.S. dollar versus 10 leading global currencies, tumbled after the 2 p.m. decision.

The Fed on Wednesday held its target for the federal funds rate at a range of 0.25 per cent to 0.5 per cent.

Back in December, Fed projections signalled four quarter-point hikes for this year. Policy makers are now indicating two hikes.