The Bank of Canada is expected to make an interest rate decision Wednesday. Stephen Poloz, Governor of the Bank of Canada answers a question during a press conference at the Bank Of Canada in Ottawa on Thursday, May 16, 2019. THE CANADIAN PRESS/Sean Kilpatrick

Bank of Canada holds rate, says numbers reinforcing view slowdown was temporary

The central bank, as widely expected, kept its trend-setting rate at 1.75 per cent Wednesday

The Bank of Canada is holding its key interest rate steady and its senior officials insist there’s more proof an economic pickup has followed the abrupt winter deceleration.

The central bank, as widely expected, kept its trend-setting rate at 1.75 per cent Wednesday — and governor Stephen Poloz appeared to be in no hurry to make a move, even as he pointed to economic improvements.

The bank said in a statement that there’s “accumulating evidence” the economy has been re-emerging in the second quarter of this year following a period when economic growth nearly came to a halt.

“Overall, recent data have reinforced governing council’s view that the slowdown in late 2018 and early 2019 was temporary,” the bank said.

Several recent economic indicators have been unexpectedly robust. Canada will receive another important piece of information Friday with the release of its economic growth report for the first quarter.

The central bank said data has shown the oil sector is beginning to recover, the national housing market is stabilizing and job growth remains strong. The numbers, it added, also point to growth in consumer spending, exports and business investment.

However, the economy also faces expanding trade risks, the bank said, following the escalation of international conflicts and Chinese restrictions on Canadian goods that are already having a direct impact on exports.

A diplomatic dispute that has festered for several months has led China to block some shipments of canola, pork and other products from Canada.

On trade, the bank noted that the removal of steel and aluminum tariffs as well as encouraging signs the updated North American free trade agreement is moving closer to ratification will be positives for Canadian exports and investment.

Policy-makers are also paying close attention to the high levels of debt weighing on Canadian households.

Taking these factors into consideration, the Bank of Canada said the current policy level is “appropriate.”

“Governing council will remain data dependent and especially attentive to developments in household spending, oil markets and the global trade environment,” the statement said.

Many economists expect the central bank to leave its key interest rate untouched until at least late in the year and perhaps longer. Some have predicted a rate cut will come before the next increase.

The next rate decision is scheduled for July 10, when the bank will also release its updated economic forecasts in its quarterly monetary policy report.

Last month, the weaker economic data led Poloz to set aside talk of rate increases.

The sudden down shift over the winter — caused mostly by a drop in oil prices — forced the central bank to cut its 2019 growth forecast. The reduction came after the economy ran at close to full tilt for most of 2017 and 2018 — a stretch that saw Poloz hike the interest rate five times.

READ MORE: Bank of Canada holds interest rate, drops growth forecast for 2019

Andy Blatchford, The Canadian Press


Like us on Facebook and follow us on Twitter.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Comments are closed

Just Posted

Back in Time

Historical Perspective

High water and flooding hits Clearwater

Potential for roadblock on Clearwater Valley Road due to potential washouts

Tk’emlups, Simpcw First Nations chiefs call on Tiny House Warriors to leave Blue River protest camp

“The Tiny House Warriors are not from Simpcw, nor are they our guests in our territory.”

TOTA recognized as Safe Travel Destination

Announcement confirms successful effort by communities to follow new health guidelines

PHOTO: Wells Gray Riders Association holds Canada Day parade

Riders don’t let the rainy morning dampen their spirits

B.C. accommodators need phone lines to light up as in-province travel given green light

Travel restrictions during the COVID-19 pandemic have decimated the tourism and hospitality industries

300 Cache Creek residents on evacuation alert due to flood risk as river rises

Heavy rainfall on Canada Day has river rising steadily, threatening 175 properties

First glimpse of Canada’s true COVID-19 infection rate expected mid-July

At least 105,000 Canadians have tested positive for COVID-19 since the coronavirus was identified

Police ramp up efforts to get impaired drivers off B.C. roads this summer

July is dedicated to the Summer CounterAttack Impaired Driving Campaign

Migrant workers stage multi-city action for full status amid COVID-19 risks

‘COVID-19 has exacerbated an existing crisis’

Okanagan school drops ‘Rebels’ sports team name, citing links with U.S. Civil War

Name and formerly-used images “fly in the face” of the district’s human rights policy, says board chair

PHOTOS: B.C.’s top doc picks up personalized Fluevog shoes, tours mural exhibition

Murals of Gratitude exhibit includes at least one portrait of Henry alongside paintings of health-care workers

In troubled times: Independence Day in a land of confusion

Buffeted by invisible forces and just plain worn out, the United States of America celebrates its 244th birthday

Stop enforcing sex work laws during COVID-19, advocates say

There are provisions in Canada’s prostitution laws that make workers immune from prosecution, but not from arrest

Most Read