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.

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

Just Posted

Coastal GasLink work camp in Vanderhoof gets approved by the ALC

The work camp behind the Vanderhoof airport was first rejected by the commission in October last year

Vanderhoof post office closed until further notice

There will be no mail going in or out of the Vanderhoof… Continue reading

Nak’azdli and UNBC form partnership to preserve inter-generational stories

“Stories can empower. Stories can bring people together. Stories can be instructive,”… Continue reading

UNBC professor receives funding to research oilspill response

The $1.9 million in funding was provided by Fisheries and Oceans Canada

B.C. premier talks forestry, service needs with handful of northern mayors in Prince George

Prince George meeting completes premier’s tour of Kitimat, Terrace, Fort St. James and Quesnel

Women take centre stage at NHL all-star skills competition

Canada beat the United States 2-1 in a spirited 3-on-3 game between female players Friday night

BCLC opens novelty bet on Harry and Meghan moving to the west coast

Meanwhile, real estate agency points to four possible homes for the family

Canada slips in global corruption ranking in aftermath of SNC-Lavalin scandal

The country obtained a score of 77, which places it at the top in the Americas

Wuhan bans cars, Hong Kong closes schools as coronavirus spreads

Hong Kong leader Carrie Lam said her government will raise its response level to emergency, highest one

B.C.’s oldest practising lawyer celebrates 100th birthday, shares advice

Firefighters bring Constance Isherwood a cake with 100 birthday candles

Vernon woman suing McDonald’s for spilled coffee

Woman seeking nearly $10K, says employee failed to put lid on properly

Diners’ health tax not catching on in B.C., restaurant group says

Small businesses look for options to cover employer health tax

B.C. comic wins judgment after club owner slaps cellphone out of his hands

Incident happened last summer when Garrett Clark was performing in Abbotsford

Most Read