The Bank of Canada has made its latest announcement, choosing to freeze its key interest rate at 0.5 per cent.
In a release at 10am on Wednesday, the bank stated: “The global economy is progressing largely as the Bank anticipated in its January Monetary Policy Report. Financial market volatility, reflecting heightened concerns about economic momentum, appears to be abating.
“Although downside risks remain, the Bank still expects global growth to strengthen this year and next. Recent data indicate that the US expansion remains broadly on track.
“At the same time, the low level of oil prices will continue to dampen growth in Canada and other energy-producing countries.”
In its summary, the Bank of Canada also made reference to rebounds in commodities and oil and said that economic conditions are evolving along the lines of its assumptions in January.
“Canada’s GDP growth in the fourth quarter was not as weak as expected, but the near-term outlook for the economy remains broadly the same as in January,” the release continued. “National employment has held up despite job losses in resource-intensive regions, and household spending continues to underpin domestic demand. Non-energy exports are gathering momentum, particularly in sectors that are sensitive to exchange rate movements.
“However, overall business investment remains very weak due to retrenchment in the resource sector.”
Prior to the announcement, the Canadian dollar reached its highest levels for nearly four months. At 8:31am in Toronto it was at C$1.3406 per US dollar, representing its strongest levels since November 19.
The central bank’s declaration arrives two weeks ahead of a federal budget which it is hoped will stimulate the economy. Reports suggest that it will include a host of plans for spending on infrastructure-related projects.
The interest rate was cut on two occasions during 2015 in a move that was designed to assist the economy following a collapse in oil prices. Currently, North American crude is trading at around $37.16 per barrel: up from just $26.05 per barrel in February.
Elsewhere, the European Central Bank will make its interest rate announcement tomorrow, with the Federal Reserve and Bank of Japan due next week.