A woman walks past the Bank of Canada Wednesday September 6, 2017 in Ottawa. THE CANADIAN PRESS/Adrian Wyld

A woman walks past the Bank of Canada Wednesday September 6, 2017 in Ottawa. THE CANADIAN PRESS/Adrian Wyld

Bank of Canada keeps key interest rate target on hold at 1.75 per cent

The Bank of Canada said there is early evidence that the global economy is stabilizing

The Bank of Canada kept its key interest rate on hold where it has been for more than a year as it said Wednesday that ongoing trade conflicts and related uncertainty continue to weigh on the global economy.

The central bank’s overnight rate target has been set at 1.75 per cent since October of last year.

In its rate announcement, the Bank of Canada said there is early evidence that the global economy is stabilizing and growth is still expected to edge higher over the next couple of years.

“Financial markets have been supported by central bank actions and waning recession concerns, while being buffeted by news on the trade front,” the bank said.

“Indeed, ongoing trade conflicts and related uncertainty are still weighing on global economic activity, and remain the biggest source of risk to the outlook.”

Stock markets tumbled Tuesday after U.S. President Donald Trump said he had “no deadline” to end a 16-month trade war with China that has hurt the global economy and downplayed the likelihood of reaching a deal before the U.S. elections next year.

New U.S. tariffs are set to kick in on many Chinese-made items, including smartphones and toys, on Dec. 15 in addition to taxes already being imposed on hundreds of billions of dollars worth of Chinese goods imported by the U.S.

Meanwhile, a resilient Canadian economy has allowed the Bank of Canada to keep interest rates on hold even as many of its international peers have moved to ease monetary policy amid concerns about the global economy.

Economic growth in Canada slowed in the third quarter to an annual pace of 1.3 per cent, in line with the Bank of Canada’s forecast in October. Consumer spending and housing helped support growth in the quarter, however the central bank also noted that investment spending came in stronger than expected.

Statistics Canada reported last week that growth in the third quarter came as business investment rose 2.6 per cent, its fastest pace since the fourth quarter of 2017.

“The bank will be assessing the extent to which this points to renewed momentum in investment,” the Bank of Canada said.

“Future interest rate decisions will be guided by the bank’s continuing assessment of the adverse impact of trade conflicts against the sources of resilience in the Canadian economy — notably consumer spending and housing activity.”

Changes in the Bank of Canada’s overnight rate target affect the prime rates at the big banks and in turn the rates Canadians pay for variable-rate mortgages and other floating-rate loans.

The Bank of Canada’s next interest rate decision is set for Jan. 22, when it will also update its outlook for the economy and inflation as part of its quarterly monetary policy report.

ALSO READ: Former Bank of Canada governor to serve as UN special envoy on ‘climate action’

READ MORE: Bank of Canada holds interest rate, warns economy’s resilience to be ‘tested’

Craig Wong, The Canadian Press


Like us on Facebook and follow us on Twitter.

Just Posted

Two volunteers work to sieve a sample of sand and ocean water through a filter, capturing any potential microplastics. (Courtesy of Ocean Diagnostics)
Victoria startup making waves in microplastics research

New products from Ocean Diagnostics will make research faster, more affordable

Island Savings kick-starts the Equipped to Heal campaign with $120,000. (Courtesy Victoria Hospitals Foundation)
Latest Victoria Hospitals Foundation campaign targets $1M for mental health

Goal is to outfit new 19-bed unit at Eric Martin Pavilion

Willows Beach in Oak Bay. (Black Press Media file photo)
Seven days of sun set to shine on Greater Victoria

Special weather statement warns of higher than usual temperatures

Chef Trevor Randle leads a June 21 online cooking featuring recipes – beef zesty lettuce wraps, blueberry strudel and blueberry spritzer. (Courtesy We Heart Local BC)
Free online cooking course explores B.C. blueberries and beef

Chef Trevor Randle calls them the province’s most flavourful foods

Google Maps shows significant traffic backups after a crash reported shortly before noon on Father’s Day, June 20. (Google Maps)
Father’s Day crash in Saanich closes lane of McKenzie Avenue

Police say there were injuries, traffic impacted

Jesse Roper tackles weeds in his garden to kick off the 2021 season of What’s In My Garden Man? (YouTube/Whats In My Garden)
VIDEO: Metchosin singer-songwriter Jesse Roper invites gardeners into his plot

What’s In My Garden, Man? kicks off with the poop on compost

FILE – Most lanes remain closed at the Peace Arch border crossing into the U.S. from Canada, where the shared border has been closed for nonessential travel in an effort to prevent the spread of the coronavirus, Thursday, May 7, 2020, in Blaine, Wash. The restrictions at the border took effect March 21, while allowing trade and other travel deemed essential to continue. (AP Photo/Elaine Thompson)
Feds to issue update on border measures for fully vaccinated Canadians, permanent residents

Border with U.S. to remain closed to most until at least July 21

A portion of the George Road wildfire burns near Lytton, B.C. in this Friday, June 18, 2021 handout photo. THE CANADIAN PRESS/HO, BC Wildfire Service *MANDATORY CREDIT*
Blaze near Lytton spread across steep terrain, says BC Wildfire Service

Fire began Wednesday and is suspected to be human-caused, but remains under investigation

Blair Lebsack, owner of RGE RD restaurant, poses for a portrait in the dining room, in Edmonton, Friday, June 18, 2021. Canadian restaurants are having to find ways to deal with the rising cost of food. THE CANADIAN PRESS/Jason Franson
Canadian restaurateurs grapple with rising food costs, menu prices expected to rise

Restaurants are a low margin industry, so there’s not a lot of room to work in additional costs

Cpl. Scott MacLeod and Police Service Dog Jago. Jago was killed in the line of duty on Thursday, June 17. (RCMP)
Abbotsford police, RCMP grieve 4-year-old service dog killed in line of duty

Jago killed by armed suspect during ‘high-risk’ incident in Alberta

A Lotto 6/49 ticket purchased in Parksville for the June 19, 2021 draw is a $3M winner. (Submitted photo)
Winning Lotto 6/49 ticket worth $3M purchased on Vancouver Island

Lottery prize winners have 52 weeks to claim jackpot

The George Road wildfire near Lytton, B.C., has grown to 250 hectares. (BC Wildfire Service)
B.C. drone sighting halts helicopters fighting 250 hectares of wildfire

‘If a drone collides with firefighting aircraft the consequences could be deadly,’ says BC Wildfire Service

Barbara Violo, pharmacist and owner of The Junction Chemist Pharmacy, draws up a dose behind vials of both Pfizer-BioNTech and Oxford-AstraZeneca COVID-19 vaccines on the counter, in Toronto, Friday, June 18, 2021. An independent vaccine tracker website founded by a University of Saskatchewan student says just over 20 per cent of eligible Canadians — those 12 years old and above — are now fully vaccinated. THE CANADIAN PRESS/Nathan Denette
At least 20% of eligible Canadians fully vaccinated, 75% with one dose: data

Earlier projections for reopening at this milestone didn’t include Delta variant

RCMP crest. (Black Press Media files)
Fort St. John man arrested after allegedly inviting sexual touching from children

Two children reported the incident to a trusted adult right away

Most Read