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.

Just Posted

BC Children’s Hospital fundraiser held on weekend

Locals came out in large numbers to support the event

Nechako Valley Vikings taking on the Prince George Polars this Friday

The local high school football team are the top seed in the Northern Conference double-A varsity standings

Junior boys cross country team from NVSS win big at Dawson Creek meet

Zones were held in Dawson Creek on Oct. 19 and 20

New regional training centre for firefighters in Fraser Lake

The centre boasts of a Live Fire Burn Building

New book about Vanderhoof out on shelves now

Every Little Scrap and Wonder written by Carla Funk delves into childhood memories growing up in a small town

Climate activist Greta Thunberg’s mural defaced in Edmonton

The eyes on the portrait were blacked out

LETTER: Middle class better off with Trudeau’s child benefit boost

It’s a transfer, not a tax cut, but it helps families get ahead

Report suggests new BC Ferries terminal near YVR

Metro Vancouver currently has two ferry terminals at northern and southern reaches

B.C. scouting group’s tent destroyed by black bear on Thanksgiving

The Richmond-based Sea Dragon Sea Scouts were camping at Mount Seymour Provincial Park

Greta Thunberg meets with First Nations chief in Fort McMurray

Thunberg has turned her protest against climate change into a global movement

Canucks hang on for 3-2 win over Rangers in New York

Vancouver scores three times in first period

Most Read