Stephen Poloz, Governor of the Bank of Canada concludes a news conference concerning the rise of the bank’s interest rates, in Ottawa, Tuesday July 12, 2017. (Fred Chartrand/The Canadian Press)

Central bank holds rate, notes ‘increased uncertainty’ on timing of future hikes

Central bank’s trend-setting interest rate is staying at 1.75 per cent for a third-straight announcement

The Bank of Canada left its key interest rate unchanged Wednesday and pointed to ”increased uncertainty” about the timing of future rate hikes following the economy’s abrupt deceleration in late 2018.

The central bank’s trend-setting interest rate is staying at 1.75 per cent for a third-straight policy announcement — a stretch that comes after governor Stephen Poloz introduced five rate hikes between mid-2017 and last fall.

Notably, the bank’s statement Wednesday dropped language from its release in January that said the governing council expected the rate would need to rise over time to an estimated destination range of between 2.5 and 3.5 per cent.

“Given the mixed picture that the data present, it will take time to gauge the persistence of below-potential growth and the implications for the inflation outlook,” said the statement, which explained some of the factors behind the decision.

“With increased uncertainty about the timing of future rate increases, governing council will be watching closely developments in household spending, oil markets, and global trade policy.”

Last week, Statistics Canada released a report that showed the country, over the final three months of 2018, delivered its weakest quarter of economic growth in two and a half years. Economic growth slowed to an annualized pace of just 0.4 per cent.

In its statement Wednesday, the central bank said it had been expecting a drop in household spending as well as weak numbers for exports and investment in oil-producing provinces in the fourth quarter.

But it acknowledged the slowdown ended up being “sharper and more broadly based” than it had anticipated.

READ MORE: Bank of Canada holds interest rate, views oil slump as temporary soft patch

READ MORE: Bank of Canada says Canadians owe $2 trillion as it mulls next rate hike

The central bank had been warning Canadians to expect a soft patch in late 2018 and early 2019 primarily due to the steep drop in oil prices late last year.

Poloz noted in January that “as the snow melts, we’ll have a clearer view that the economy is back on track and then likely to grow above or around two per cent after that.”

A fresh economic start by spring no longer appears to be in the forecast.

The first half of 2019, the bank added, is now on track to produce weaker numbers than its projection two months ago.

“Consumer spending and the housing market were soft, despite strong growth in employment and labour income,” the statement said.

“Both exports and business investment also fell short of expectations.”

Statistics Canada said the late-2018 slowdown was mostly due to a 2.7 per cent contraction, on a quarter-over-quarter basis, in investment spending. Overall exports saw a slight decline and household spending slowed for a second straight quarter.

Heading into the decision Wednesday, the Bank of Canada was widely expected to leave the key interest rate untouched.

Many analysts have predicted the bank will wait until at least late 2019 before introducing another rate hike. There have also been doubts whether Poloz will raise the rate again this year — or whether his next move will even be a hike.

The central bank’s next policy decision is scheduled for April 24 when it will also update its economic outlook in its monetary policy report.

On Wednesday, the bank said the global economy’s deceleration has been more pronounced than expected — and more widespread.

The moderation, it added, has been caused in large part by concerns related to trade tensions and uncertainty. The bank, however, noted that global economic prospects would improve if ongoing trade conflicts are resolved.

The bank predicted inflation to stay slightly below its ideal two per cent target through most of the year.

Andy Blatchford, The Canadian Press

Like us on Facebook and follow us on Twitter.

Just Posted

Power outage planned for Victoria General Hospital

Island Health says essential services and patient care won’t be impacted during Oct. 19 outage

Free firework safety courses coming to the West Shore right before Halloween

No permit? You could be fined anywhere between $100 and $10,000

Bonfires allowed in Saanich for $10 but only on Halloween night

Residents can purchase permits at any Saanich fire station

Fairfield-Gonzales residents aim to establish senior care phone line

The Fairfield-Gonzales Village would allow seniors living alone to have a direct line to resources

Vendors open doors to new futures at Black Press Extreme Education & Career Fair

More tham two dozen employers, educators signed on for Victoria event

VIDEO: Greater Victoria, here’s the news you missed this weekend

Dog killed in alleged hit and run, Goodlife Marathon takes over city and more

‘Save the kids!’ Dorian survivor tells the harrowing story of his Canadian wife’s death

Family held a funeral and placed Alishia Liolli’s remains in a niche at a cemetery in Windsor, Ont.

Okanagan woman, 91, votes at advance polls despite broken hip, shoulder and wrist

Angela Maynard has voted in almost every election during her lifetime

Heiltsuk Nation open first Big House in 120 years in northern B.C.

Opening means the community now has an appropriate space for spiritual and ceremonial events

Singh says NDP would form coalition with the Liberals to stop Tories

Singh was in a Liberal-held riding Sunday afternoon in Surrey where he was pressed about his post-election intentions

‘My heart goes out to the mother’: B.C. dad reacts to stabbing death of Ontario boy

Carson Crimeni, who was also 14, was bullied relentlessly, his dad says

The one with the ‘Friends’ photoshoot: Kelowna group recreates TV show intro

A friend’s departure prompted them to create something that really says, “I’ll be there for you”

Canadian Snowbirds plane crashes before air show in Atlanta

Pilot lands safely after ejecting from jet

Share crash data, private insurers tell David Eby, ICBC

B.C. monopoly makes drivers retrieve their own records

Most Read