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

  • Wholesale trade declines in June after 8 months of gains

    Economic CBC News
    Wholesale trade slipped to $61.4 billion in June, Statistics Canada reported Monday, ending an eight-month streak of expanding sales. Sales in the food, beverage and tobacco industries led the way lower, down 1.1 per cent from May's level to $10.78 billion. Source
  • Wholesale sales dip slightly in June, first decline in months: StatsCan

    Economic CTV News
    OTTAWA -- Canada's wholesale sales declined slightly in June, with the food and auto industries showing the biggest impact. Wholesale sales fell by 0.5 per cent to $61.4 billion, following a series of monthly increases. Source
  • Transat offers sunny Q3 outlook after good start to summer travel season

    Economic CTV News
    MONTREAL -- Transat A.T. Inc. says it's having a better summer season than expected and its third-quarter results will show "significantly higher" adjusted earnings than during the comparable period last year. The Montreal-based travel company says revenue has been higher than anticipated since mid-June when Transat issued its previous outlook and second-quarter results. Source
  • China SUV maker Great Wall considers bid for Jeep unit

    Economic CTV News
    BEIJING -- Chinese SUV maker Great Wall Motors is considering making a bid to buy Fiat Chrysler's Jeep unit, spokespeople for the company said Monday, in a possible ambitious new step onto the global stage for China's fast-growing auto brands. Source
  • World shares mostly down ahead of key central banker meeting

    Economic CTV News
    HONG KONG -- World stocks were mostly lower Monday as U.S. and South Korean joint military drills kept markets on edge and investors awaited a key meeting of central bankers later this week. KEEPING SCORE: European shares fell in early trading. Source
  • Korea tensions keep a lid on global markets

    Economic CTV News
    LONDON -- Global stock markets traded in narrow ranges Monday as investors awaited a key meeting of central bankers later this week and continued to monitor developments on the Korean peninsula. KEEPING SCORE: In Europe, the FTSE 100 index of leading British shares was steady at 7,326 while Germany's DAX fell 0.3 per cent to 12,132. Source
  • Back to school: How mature students can fund continuing education

    Economic CTV News
    VANCOUVER -- When Kear Porttris decided to pursue a university degree in 2010, he had to contend with responsibilities that don't cross the minds of many freshman straight out of high school, including paying his mortgage and feeding his daughter. Source
  • Trump gets the headlines but NAFTA talks face a Mexican deadline: Don Pittis

    Economic CBC News
    President Donald Trump's braying about NAFTA being the "worst trade deal maybe ever signed anywhere" might leave the impression that U.S. negotiators have all the cards in the current renegotiation. But according to Canadian trade experts the real wild card is not the United States or the hostile views of its president. Source
  • First round of NAFTA talks wrap in Washington

    Economic CBC News
    Canada, the United States and Mexico wrapped up their first round of talks Sunday to revamp the NAFTA trade pact, vowing to keep up a blistering pace of negotiations that some involved in the process said may be too fast to bridge deep differences. Source
  • Apple under pressure to dazzle as market slows

    Economic CTV News
    As Apple and Samsung gear up to launch new flagship smartphones, the market leaders are seeking a wow factor that can help them fend off challenges from rising Chinese-based manufacturers. Apple is under particular pressure to dazzle as the culture-changing California iPhone maker looks for a way to maintain its image as an innovation leader in a global market showing signs of slowing. Source