Central bank has made its first rate decision of the year amid mixed economic indicators
The Bank of Canada has decided to hold interest rates steady.
In a widely expected move, Governor Steven Poloz announced today that the central bank will hold its benchmark rate at 1.75 per cent.
Poloz has now held the rate steady for more than a year while other developed economies have slashed rates.
"The global economy is showing signs of stabilization and some recent trade developments have been positive," the announcement reads. "However, there remains a high degree of undertainty and geopolitical tensions have re-emerged, with tragic consequences. The Canadian economy has been resilient but indicators since the October Monetary Policy Report have been mixed."
The bank revised Q4 growth in 2019 down to 0.3 per cent and expects growth of 1.3 per cent in Q1 of 2020. Exports and business investment weakened at the end of 2019. Consumer confidence was "unexpectedly soft" while residential investment was "robust."
The Canadian dollar strengthened today against the greenback. The loonie held steady at 2.2 per cent inflation in December. The Bank of Canada has said it wants to keep inflation around 2 per cent. Limiting inflation was a key reason behind Poloz’s decision to maintain the 1.75 per cent interest rate.
In past decisions to hold, Poloz cited concerns about rising consumer debt in Canada. He maintains that despite global economic uncertainty, the Canadian economy remains resilient.
Despite his ‘wait-and-see’ approach, experts predict at least one rate cut from the Bank of Canada later this year.
