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

Local Liberal MP Jati Sidhu says he forgives Trudeau for brownface photos

Sidhu says Trudeau ‘didn’t know any better’ and that photos will prompt discussion

Blowback from the Trudeau in brownface debacle reaches Chilliwack

PM in questionable photos released in the middle of the federal election campaign had ripple effects

Local Liberal candidate says ad showing him with Abbotsford police officer was ‘not acceptable’

Jati Sidhu said advertisement only appeared for 30 minutes and was created by Montreal company

Prospera and Westminster credit unions approved for proposed merger

Abbotsford- and Surrey-based companies now take matter to membership vote

Pay raise hike closer to reality for Fraser Cascade trustees

Remuneration will more than double if change adopted

PHOTOS: Young protesters in B.C. and beyond demand climate change action

Many demonstaers were kids and teens who skipped school to take part

Walmart to quit selling e-cigarettes amid vaping backlash

U.S.’s largest retailer points to ‘growing’ complications in federal, state and local regulations

Former B.C. lifeguard gets house arrest for possession of child porn

Cees Vanderniet of Grand Forks will serve six months of house arrest, then two years’ probation

Student arrested at South Delta Secondary for alleged assault

The alleged assault occurred between two SDSS students on Wednesday, Sept. 18

Crown alleges resentment of ex-wife drove Oak Bay father to kill his daughters

Patrick Weir alleged in his closing arguments that Andrew Berry is responsible for the deaths of his daughters

‘I’d do it again,’ says B.C. man who swam naked, drunk in Toronto shark tank

David Weaver, of Nelson, was drunk when he went to Ripley’s Aquarium in Toronto on Oct. 12 2018

How to react to Trudeau’s racist photos? With humility, B.C. prof says

‘We are now treating racism as a crime that you cannot recover from’

Victoria man spots online photo of his totem pole 11 years after it was stolen

Mark Trueman restored the pole himself before it was stolen off of his property in Duncan

VIDEO: Fire destroys Williams Lake strip club targeted by past arson attempts

Diamonds and Dust Entertainment Lounge destroyed by fire, as well as New World Tea and Coffee House

Most Read