The Bank of Canada kept its benchmark interest rate unchanged at 1.75% on Wednesday amid signs of a cooling economy and consumer financial stress.
The central bank has raised its key rate five times since the summer of 2017, attempting to keep inflation in its 1% to 3% target range. The bank last raised its key rate in October, before deciding to do nothing in December.
The Bank of Canada's rate impacts consumers by raising or lowering the interest rates that Canadians get for lines of credit, savings accounts and variable-rate mortgages.
In announcing its latest interest rate decision, the central bank downgraded its expectations for Canada's economy this year. A 25% plunge in the price of oil since October has had a "material impact" on the economy to the point where the central bank is now forecasting economic growth of 1.7% this year. Three months ago, the Bank of Canada expected 2.1% economic growth in 2019. The downgrade comes as new data shows the number of consumer bankruptcy filings in Canada is on the rise as people struggle with higher interest rates.
But despite that slowdown, the central bank stressed that it still plans to raise interest rates again sooner rather than later. “The policy interest rate will need to rise over time into a neutral range to achieve the inflation target,” the bank said in a written statement.
