Bank Of Canada Says Economic Slowdown “Temporary,” Holds Rates Steady

In announcing its decision Wednesday to hold its benchmark interest rate at the current level of 1.75%, the Bank of Canada said that it now views Canada’s economic slowdown as "temporary."

The central bank has again maintained its target for the overnight interest rate at 1.75%, citing in its decision accumulating evidence that Canada’s economy was showing signs of slowing down in the latter half of 2018 and into the start of 2019, but now appears to be picking up momentum heading into the second half of the year.

The bank noted that consumer spending and exports have shown signs of improving in the second quarter, and strong recent job numbers suggest "businesses see the weakness in the past two quarters as temporary."

If there continues to be one sector muddling the economic picture, it is trade, said the Bank of Canada, noting that escalating tensions between Canada and the United States continue to drag down Canadian exports.

Following Wednesday’s comments by the Bank of Canada, half (50%) of analysts polled by Bloomberg News now expect an interest rate cut this fall.