Central Bank Keeps Rates on Hold
The Bank of Canada remains in cautious mode about its next interest rate hike, even as the key pieces of a healthy recovery are falling into place.
Governor Stephen Poloz and his central bank colleagues kept the benchmark overnight rate unchanged at 1% Wednesday in its final rate decision of 2017.
Canada's central bank has already hiked interest rates twice this year – in July and September – as it tries gradually to return rates to more normal levels.
The BOC also repeated a warning that the global outlook is clouded by "considerable uncertainty, notably about geopolitical developments and trade policies." The possible failure of talks with the United States to renegotiate the North American free trade agreement has put a chill on business investment in Canada, particularly in the manufacturing sector.
The rest of the bank's latest statement is mainly about how the economy is pivoting towards more sustainable growth. The bank pointed out that Gross Domestic Product growth will remain "above potential" in the second half of this year, job gains are "very strong," wages are improving, consumer spending is "robust," government infrastructure spending is becoming "more apparent," and export growth is picking up again.