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.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Two teens were sent to hospital after being stabbed Saturday evening. (Shane MacKichan photo)
Two teens stabbed in Abbotsford

20-year-old man has been detained

The Bug Girl, written by seven-year-old Sophia Spencer, is being given to 500 B.C. classrooms as part of Canadian Agriculture Literacy Month. (Submitted photos)
Reading challenges part of Canadian Agriculture Literacy Month

Abbotsford-based BC Agriculture in the Classroom participates in 10th annual event

B.C. Supreme Court in Vancouver on Tuesday December 11, 2018. THE CANADIAN PRESS/Darryl Dyck
B.C.’s compromise on in-person worship at three churches called ‘absolutely unacceptable’

Would allow outdoor services of 25 or less by Langley, Abbotsford and Chilliwack churches

Police tape is shown in Toronto Tuesday, May 2, 2017. (Graeme Roy/The Canadian Press)
CRIME STOPPERS: ‘Most wanted’ for the week of Feb. 28

Crime Stoppers’ weekly list based on information provided by police investigators

Alina Durham, mother of Shaelene Bell, lights candles on behalf of Bell’s two sons during a vigil on Saturday, Feb. 27, 2021. (Jenna Hauck/ Chilliwack Progress)
VIDEO and PHOTOS: Candlelight vigil for Shaelene Bell of Chilliwack sends message of hope

Small group of family, friends gathered to shine light for 23-year-old mother missing for four weeks

A health worker holds a vial of AstraZeneca vaccine to be administered to members of the police at a COVID-19 vaccination center in Mainz, Germany, Thursday, Feb. 25, 2021. The federal state of Rhineland-Palatinate, start with the vaccination of police officers in internal police vaccination centers. (Andreas Arnold/dpa via AP)
B.C. officials to unveil new details of COVID vaccination plan Monday

Seniors and health-care workers who haven’t gotten their shot are next on the list

An investigation is underway after a man was shot and killed by Tofino RCMP in Opitsaht. (Black Press Media file photo)
Man shot and killed by RCMP near Tofino, police watchdog investigating

Investigation underway by Independent Investigations Office of British Columbia.

Baldy Mountain Resort was shut down on Saturday after a fatal workplace accident. (Baldy Mountain picture)
Jasmine and Gwen Donaldson are part of the CAT team working to reduce stigma for marginalized groups in Campbell River. Photo by Marc Kitteringham, Campbell River Mirror
Jasmine’s story: Stigma can be the hardest hurdle for those overcoming addiction

Recovering B.C. addict says welcome, connection and community key for rebuilding after drug habit

A Vancouver restaurant owner was found guilty of violating B.C.’s Human Rights Code by discriminating against customers on the basis of their race. (Pixabay)
Vancouver restaurant owner ordered to pay $4,000 to customers after racist remark

Referring to patrons as ‘you Arabs’ constitutes discrimination under B.C.’s Human Rights Code, ruling deems

Approximate location of the vehicle incident. (Google Maps)
Vehicle incident blocking Coquihalla traffic in both directions

Both directions of traffic stopped due to vehicle incident

Judith Uwamahoro is Black, approximately 4’7″ tall, 80 pounds and has short black hair and brown eyes. (Surrey RCMP handout)
UPDATED: Lower Mainland 9-year-old located after police make public plea

Judith Uwamahoro went missing Friday at around 4 p.m. in Surrey

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

Five-year-old Nancy Murphy wears a full mask and face shield as she waits in line for her kindergarten class to enter school during the COVID-19 pandemic on Tuesday, September 15, 2020. THE CANADIAN PRESS/Nathan Denette
Variant of concern linked to COVID-19 outbreak at three Surrey schools

Cases appear to be linked to community transmissions, but schools will remain open

Most Read