Bank of Canada stays course on key interest rate

OTTAWA -- The Bank of Canada is sticking with its key interest rate as it waits to assess economy-boosting measures expected in the upcoming federal budget.

See Full Article

The central bank kept its trend-setting interest rate locked at 0.5 per cent in its scheduled announcement.

The bank says while stubbornly low oil prices continue to hurt the economy, it notes inflation appears on track and that 2015 closed out with better-than-expected growth.

But the Bank of Canada says financial vulnerabilities have crept higher and the commodity-price slump has left overall business investment very weak.

The bank says that next month it will evaluate the impact of fiscal stimulus measures Ottawa is expected to include in the March 22 budget.

The federal government has made billions of dollars worth of commitments -- such as infrastructure spending -- that it insists will help revive economic growth and create jobs.

The Bank of Canada also stood pat on its key rate in January, after lowering the benchmark twice in 2015.

In explaining the January decision, governor Stephen Poloz said senior bank officials entered pre-announcement deliberations with a bias toward making another cut to the already-low interest rate of 0.5 per cent.

Poloz said despite the weak outlook, the eventual decision to hold firm came after they considered an important factor: the federal government's promise to pump billions into infrastructure projects.

In January, the central bank downgraded its 2016 growth projection to 1.4 per cent from its fall forecast of two per cent. At the time, it also predicted the economy to eventually bounce back and expand by 2.4 per cent in 2017.

Heading into Wednesday's announcement, there was little expectation of a change to the Bank of Canada's overnight rate target. Economists, however, were looking for fresh information as to how it views the state of the economy.

The bank's statement noted how oil and some commodity prices have rebounded in recent weeks, nudging up the weakened Canadian dollar.

"With these movements, both the price of oil and the exchange rate have averaged close to levels assumed in the January (monetary policy report)," the statement said.

"At the same time, the low level of oil prices will continue to dampen growth in Canada."

The bank also said Wednesday that financial market volatility appears to be "abating" and economic growth in the United States has continued to progress as expected.

Canada-wide employment, meanwhile, has held up despite job losses in resources industries and non-energy exports are strengthening particularly in sectors that benefit from the lower dollar, the bank said.

Overall business investment remains feeble, the statement added, "due to retrenchment in the resource sector."

The Bank of Canada's next scheduled rate announcement is April 13, when it will also release its quarterly monetary policy report.



Advertisements

Latest Economic News

  • No desk of your own: The office plan of the future?

    Economic CBC News
    Imagine coming to work every day and not being sure where to sit. You don't have a desk — instead, you need to figure out what's ahead in your day and what type of space you need, and then find a spot. Source
  • Is your condo board above board? Tips for evaluating condo governance

    Economic CBC News
    Condominium governance is in the spotlight after an investigation by CBC Toronto reporters unveiled questionable practices at a series of downtown Toronto buildings. Owners and property managers in those buildings say a group of people have aggressively sought control of the boards and budgets of multiple condos. Source
  • Hong Kong cops arrest 21 Uber drivers in latest crackdown

    Economic CTV News
    Hong Kong police launched a fresh crackdown Tuesday on Uber, arresting 21 drivers suspected of working for the ride-hailing giant in the Asian financial centre. It's the latest regulatory headache for Uber, which already is fighting a similar case in Hong Kong. Source
  • Asian stocks drift in wake of Manchester blast

    Economic CTV News
    TOKYO - Asian shares were mostly higher in early trading Tuesday after police said they were treating an explosion in Manchester, England, that killed at least 19 people as a terror attack. Oil prices fell back after Monday's rally. Source
  • Sony boss promises profitability but quiet on specifics

    Economic CTV News
    TOKYO -- Sony’s leader promised a comeback for the Japanese electronics and entertainment company having its best profitability in two decades. “We are a company that moves people,” said Chief Executive Kazuo Hirai, as he outlined the strategy for the company at its Tokyo headquarters Tuesday. Source
  • CRA says eight agency workers fired for roles in privacy breaches

    Economic CTV News
    OTTAWA -- The Canada Revenue Agency says eight of its employees were fired in the last fiscal year after violating taxpayers' privacy. Previously, the agency has not always confirmed if an employee was fired or shuffled out of the CRA for being part of a privacy breach, often citing the employee's privacy. Source
  • 2 more leaks found along Dakota Access pipeline

    Economic CTV News
    BISMARCK, N.D. -- The Dakota Access pipeline system leaked more than 100 gallons of oil in North Dakota in two separate incidents in March -- the second and third known leaks discovered as crews prepared the disputed $3.8 billion pipeline for operation. Source
  • Leaks found on Dakota Access pipeline system

    Economic CTV News
    BISMARCK, N.D. -- The Dakota Access pipeline and a feeder line leaked more than 100 gallons of oil in North Dakota in separate incidents in March as crews prepared the disputed $3.8 billion pipeline for operation. Source
  • Philippe Couillard says Quebec needs to take care of Bombardier

    Economic CTV News
    HAIFA, Israel -- Quebec's premier says the province needs to take care of Bombardier because of its unique importance to the province. Philippe Couillard is urging Quebecers to support the transportation company, which has recently faced a strong public backlash over planned hikes to executive pay. Source
  • Canadian banks set to reveal 1st earnings since CBC coverage on sales practices

    Economic CBC News
    The Canadian banks are expected to benefit from rising U.S. interest rates and fewer bad loans in the oilpatch as they start reporting their latest quarterly results this week, but analysts say worries about the housing market and consumer debt remain key concerns. Source