Interest rate hikes appear to be on hold in Canada.
The Bank of Canada announced Wednesday that it is holding its benchmark interest rate at 1.75% and says the timing of possible future rate increases has become "increasingly uncertain."
The central bank cited a worse than expected global economic slowdown, a sharper-than-anticipated slowdown in Canada's oil patch and softness in the domestic housing market and weak consumer spending as reasons to hold interest rates steady for the time being.
"It is clear that global economic prospects would be buoyed by the resolution of trade conflicts," the Bank of Canada said in a written statement. "With increased uncertainty about the timing of future rate increases, [the bank] will be watching closely developments in household spending, oil markets, and global trade policy."
Bank of Canada Governor Stephen Poloz is next scheduled to meet with other members of the central bank's Governing Council and reveal their decision on where to set the bank's interest rate on April 24. The consensus among economists polled by Bloomberg is that the central bank will stand pat again at that meeting.
But trading in investments known as overnight index swaps suggests there's about an 8% chance of the Bank of Canada changing direction entirely and cutting its benchmark interest rate. If that happens, it would be the first interest rate cut in Canada since 2015. Currency traders also seem to think that an interest rate cut is now on the table.
The Canadian dollar lost half a cent to close at 74.40 cents U.S. when after the interest rate decision came out. All things being equal, higher interest rates cause a country's currency to increase in value, while lower interest rates cause the value to fall.
