A woman walks past the Bank of Canada Wednesday September 6, 2017 in Ottawa. THE CANADIAN PRESS/Adrian Wyld

Bank of Canada keeps key interest rate target on hold at 1.75 per cent

The Bank of Canada said there is early evidence that the global economy is stabilizing

The Bank of Canada kept its key interest rate on hold where it has been for more than a year as it said Wednesday that ongoing trade conflicts and related uncertainty continue to weigh on the global economy.

The central bank’s overnight rate target has been set at 1.75 per cent since October of last year.

In its rate announcement, the Bank of Canada said there is early evidence that the global economy is stabilizing and growth is still expected to edge higher over the next couple of years.

“Financial markets have been supported by central bank actions and waning recession concerns, while being buffeted by news on the trade front,” the bank said.

“Indeed, ongoing trade conflicts and related uncertainty are still weighing on global economic activity, and remain the biggest source of risk to the outlook.”

Stock markets tumbled Tuesday after U.S. President Donald Trump said he had “no deadline” to end a 16-month trade war with China that has hurt the global economy and downplayed the likelihood of reaching a deal before the U.S. elections next year.

New U.S. tariffs are set to kick in on many Chinese-made items, including smartphones and toys, on Dec. 15 in addition to taxes already being imposed on hundreds of billions of dollars worth of Chinese goods imported by the U.S.

Meanwhile, a resilient Canadian economy has allowed the Bank of Canada to keep interest rates on hold even as many of its international peers have moved to ease monetary policy amid concerns about the global economy.

Economic growth in Canada slowed in the third quarter to an annual pace of 1.3 per cent, in line with the Bank of Canada’s forecast in October. Consumer spending and housing helped support growth in the quarter, however the central bank also noted that investment spending came in stronger than expected.

Statistics Canada reported last week that growth in the third quarter came as business investment rose 2.6 per cent, its fastest pace since the fourth quarter of 2017.

“The bank will be assessing the extent to which this points to renewed momentum in investment,” the Bank of Canada said.

“Future interest rate decisions will be guided by the bank’s continuing assessment of the adverse impact of trade conflicts against the sources of resilience in the Canadian economy — notably consumer spending and housing activity.”

Changes in the Bank of Canada’s overnight rate target affect the prime rates at the big banks and in turn the rates Canadians pay for variable-rate mortgages and other floating-rate loans.

The Bank of Canada’s next interest rate decision is set for Jan. 22, when it will also update its outlook for the economy and inflation as part of its quarterly monetary policy report.

ALSO READ: Former Bank of Canada governor to serve as UN special envoy on ‘climate action’

READ MORE: Bank of Canada holds interest rate, warns economy’s resilience to be ‘tested’

Craig Wong, The Canadian Press


Like us on Facebook and follow us on Twitter.

Just Posted

The final Castor Farmers Market of 2019 took place on Dec. 5th

The Castor Farmers Market will be taking a couple months off before returning in March

Alberta RCMP prepares for National Impaired Driving Enforcement Day and shares safety tips

National Impaired Driving Enforcement Day is a nationwide RCMP initiative taking place Dec.7th

Lacombe’s AFSC ready to help Alberta producers facing difficult times

2019 season not easy for Alberta producers due toweather and other challenges

Castor seniors learn how to protect themselves from scams and abuse

Around 20 seniors in Castor attended a recent workshop at the Castor Golden Circle

Permits expected in ‘the next month or two’ for the Paintearth Wind Project

The project, if approved, is projected to start construction in the second quarter of 2021

Fashion Fridays: Ethical and sustainable gifts for the season

Kim XO, helps to keep you looking good on Fashion Fridays on the Black Press Media Network

Man accused in toddler son’s death inept parent, not murderer: defence

Toddler’s body was found outside Good Shepherd Anglican Church in April 2017

Job numbers disappointing, but oil and gas growth expected in 2020: Kenney

Unemployment rate in Alberta rose to 7.2 per cent from 6.7 per cent last month

‘Things haven’t changed enough:’ Ecole Polytechnique anniversary prompts reflection

Fourteen women were fatally shot by a gunman at the Montreal school on Dec. 6, 1989

Feds approve Alberta’s carbon tax on big industrial emitters

Tax will be applied on 10 per cent of emissions produced by the province’s biggest polluters

Appeal denied: Alberta’s top court upholds conviction of triple-murderer

Douglas Garland was convicted of first-degree murder in the deaths of a couple and their grandson

Second warning on romaine lettuce from California region as another E. coli case reported

Two cases of E. coli have been reported in relation to the illness in the U.S.

Many of Canada’s working poor can’t afford lawyers, don’t qualify for legal aid

One lawyer says many people earn too much to qualify for legal aid, but not enough to really live on

Economy lost 71,200 jobs in November, unemployment rate climbs to 5.9%

Jobless rate is at its highest since August 2018, when it hit 6%

Most Read