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

Telkwa lifts boil water advisory

The Village of Telkwa has just announced that as of 3:00 p.m.… Continue reading

Chevron’s move to exit Kitimat LNG project a dash of ‘cold water’ for gas industry

Canada Energy Regulator approved a 40-year licence to export natural gas for Kitimat LNG

New report into sawmill explosions released

The report recommends streamlining investigative process

No parole for 12 years for Burns Lake man convicted of second degree murder

Judge said he did not believe Albert Giesbrecht’s claim his gun discharged accidentally

Snowfall warning continues for parts of B.C.’s Interior

First significant snowfall of the season prompts Environment Canada warning

VIDEO: Feds give update on flying clearance for Santa’s sled

Transport Minister Marc Garneau has this message for the country’s children

Investigators confirm three died in B.C. plane crash

Transport Canada provides information bulletin

Prime Minister sets 2025 timeline for plan to remove fish farms from B.C. waters

Foes heartened by plan to transition aquaculture found in Fisheries minister mandate letter

Canada’s Attorney General looking to larger reforms on doctor-assisted death

The Quebec Superior Court gave Ottawa just six months — until March 2020 — to amend the law

Navigating ‘fever phobia’: B.C. doctor gives tips on when a sick kid should get to the ER

Any temperature above 38 C is considered a fever, but not all cases warrant a trip to the hospital

Wagon wheels can now be any size: B.C. community scraps 52 obsolete bylaws

They include an old bylaw regulating public morals

Indigenous mother wins $20,000 racial discrimination case against Vancouver police

Vancouver Police Board ordered to pay $20,000 and create Indigenous-sensitivity training

Sentencing for B.C. father who murdered two young daughters starts Monday

The bodies of Aubrey, 4, and Chloe, 6, were found in Oak Bay father’s apartment Dec. 25, 2017

B.C. vet talks tips for winter travel with pets

Going to see the vet the day before a trip is never a good idea

Most Read