Bank of Canada weighing rate cut to help cushion commodity punch to economy

OTTAWA -- The Bank of Canada is again facing the question of whether lowering its already-low key interest rate will help ease the pain of Canada's struggling economy.

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Governor Stephen Poloz will make the central bank's latest scheduled rate announcement Wednesday at a time of tumbling oil prices, a weak global economy and downgraded outlooks for Canadian growth.

Poloz lowered the trend-setting rate twice last year to 0.5 per cent to help soften the blow of sliding oil prices -- and observers are divided on whether he will pull the trigger again.

The International Monetary Fund became the latest organization to lower its growth projection for Canada -- dropping its 2017 forecast today to 2.1 per cent, from 2.4 per cent in October.

Canada's commodity-dependent economy has been walloped by falling prices -- particularly in resource-rich Alberta, where bond rating agency Moody's changed the outlook to negative from stable while retaining the province's triple-A rating.

A new report by the International Energy Agency today warned that world oil prices could fall further because markets could drown in over-supply -- particularly as sanctions are lifted on Iran amid pessimism about the prospects of global demand.



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