The Bank of Canada is expected to make an interest rate decision Wednesday. Stephen Poloz, Governor of the Bank of Canada answers a question during a press conference at the Bank Of Canada in Ottawa on Thursday, May 16, 2019. THE CANADIAN PRESS/Sean Kilpatrick

Bank of Canada holds rate, says numbers reinforcing view slowdown was temporary

The central bank, as widely expected, kept its trend-setting rate at 1.75 per cent Wednesday

The Bank of Canada is holding its key interest rate steady and its senior officials insist there’s more proof an economic pickup has followed the abrupt winter deceleration.

The central bank, as widely expected, kept its trend-setting rate at 1.75 per cent Wednesday — and governor Stephen Poloz appeared to be in no hurry to make a move, even as he pointed to economic improvements.

The bank said in a statement that there’s “accumulating evidence” the economy has been re-emerging in the second quarter of this year following a period when economic growth nearly came to a halt.

“Overall, recent data have reinforced governing council’s view that the slowdown in late 2018 and early 2019 was temporary,” the bank said.

Several recent economic indicators have been unexpectedly robust. Canada will receive another important piece of information Friday with the release of its economic growth report for the first quarter.

The central bank said data has shown the oil sector is beginning to recover, the national housing market is stabilizing and job growth remains strong. The numbers, it added, also point to growth in consumer spending, exports and business investment.

However, the economy also faces expanding trade risks, the bank said, following the escalation of international conflicts and Chinese restrictions on Canadian goods that are already having a direct impact on exports.

A diplomatic dispute that has festered for several months has led China to block some shipments of canola, pork and other products from Canada.

On trade, the bank noted that the removal of steel and aluminum tariffs as well as encouraging signs the updated North American free trade agreement is moving closer to ratification will be positives for Canadian exports and investment.

Policy-makers are also paying close attention to the high levels of debt weighing on Canadian households.

Taking these factors into consideration, the Bank of Canada said the current policy level is “appropriate.”

“Governing council will remain data dependent and especially attentive to developments in household spending, oil markets and the global trade environment,” the statement said.

Many economists expect the central bank to leave its key interest rate untouched until at least late in the year and perhaps longer. Some have predicted a rate cut will come before the next increase.

The next rate decision is scheduled for July 10, when the bank will also release its updated economic forecasts in its quarterly monetary policy report.

Last month, the weaker economic data led Poloz to set aside talk of rate increases.

The sudden down shift over the winter — caused mostly by a drop in oil prices — forced the central bank to cut its 2019 growth forecast. The reduction came after the economy ran at close to full tilt for most of 2017 and 2018 — a stretch that saw Poloz hike the interest rate five times.

READ MORE: Bank of Canada holds interest rate, drops growth forecast for 2019

Andy Blatchford, The Canadian Press


Like us on Facebook and follow us on Twitter.

Just Posted

Vehicle smashes sign and cars in Summerland school parking lot

Driver of a Ford Expedition lost control, crashing into two other vehicles

Penticton cyclist injured in hit-and-run in critical condition

Jesse Birkedal was injured in a hit-and-run while cycling on Eastside Road

Top classic car show cruises back into Penticton

Peach City Beach Cruise runs June 21 to 23 in Penticton

Summerland Credit Union donates pop-up tent to NeighbourLink

Donation marks credit union’s 75th anniversary

Penticton pharmacy restricted from dispensing opioid treatment drugs

B.C. College of Pharmacists alleges Sunrise Pharmacy dispensed treatment drugs against rules

PHOTOS: Elusive ‘ghost whale’ surfaces near Campbell River

Ecotourism operator captures images of the rare white orca

Man arrested during Kelowna police stand off

Water is flooding Highway 33 in Kelowna Monday afternoon

Judas Priest rocks the Okanagan

Judas Priest is on a 32 date tour of North America

Victoria mom describes finding son ‘gone’ on first day of coroners inquest into overdose death

Resulting recommendations could change handling of youth records amidst the overdose crisis

Dash-cam video in trial of accused cop killer shows man with a gun

Footage is shown at trial of Oscar Arfmann, charged with killing Const. John Davidson of Abbotsford

Suicide confirmed in case of B.C. father who’d been missing for months

2018 disappearance sparked massive search for Ben Kilmer

Eight U.S. senators write to John Horgan over B.C. mining pollution

The dispute stems from Teck Resources’ coal mines in B.C.’s Elk Valley

Restrictive policies affecting labour mobility for care aides in B.C.

‘I had to take two competency exams and pay over $1,400,’ said an Okanagan care aide

Threats charge against Surrey’s Jaspal Atwal stayed

Atwal, 64, was at centre of controversy in 2018 over his attendance at prime minister’s reception in India

Most Read