The Bank of Canada kept its key interest rate on hold where it has been for more than a year as it said Wednesday that ongoing trade conflicts and related uncertainty continue to weigh on the global economy.
The central bankB次元官网网址檚 overnight rate target has been set at 1.75 per cent since October of last year.
In its rate announcement, the Bank of Canada said there is early evidence that the global economy is stabilizing and growth is still expected to edge higher over the next couple of years.
B次元官网网址淔inancial markets have been supported by central bank actions and waning recession concerns, while being buffeted by news on the trade front,B次元官网网址� the bank said.
B次元官网网址淚ndeed, ongoing trade conflicts and related uncertainty are still weighing on global economic activity, and remain the biggest source of risk to the outlook.B次元官网网址�
Stock markets tumbled Tuesday after U.S. President Donald Trump said he had B次元官网网址渘o deadlineB次元官网网址� to end a 16-month trade war with China that has hurt the global economy and downplayed the likelihood of reaching a deal before the U.S. elections next year.
New U.S. tariffs are set to kick in on many Chinese-made items, including smartphones and toys, on Dec. 15 in addition to taxes already being imposed on hundreds of billions of dollars worth of Chinese goods imported by the U.S.
Meanwhile, a resilient Canadian economy has allowed the Bank of Canada to keep interest rates on hold even as many of its international peers have moved to ease monetary policy amid concerns about the global economy.
Economic growth in Canada slowed in the third quarter to an annual pace of 1.3 per cent, in line with the Bank of CanadaB次元官网网址檚 forecast in October. Consumer spending and housing helped support growth in the quarter, however the central bank also noted that investment spending came in stronger than expected.
Statistics Canada reported last week that growth in the third quarter came as business investment rose 2.6 per cent, its fastest pace since the fourth quarter of 2017.
B次元官网网址淭he bank will be assessing the extent to which this points to renewed momentum in investment,B次元官网网址� the Bank of Canada said.
B次元官网网址淔uture interest rate decisions will be guided by the bankB次元官网网址檚 continuing assessment of the adverse impact of trade conflicts against the sources of resilience in the Canadian economy B次元官网网址� notably consumer spending and housing activity.B次元官网网址�
Changes in the Bank of CanadaB次元官网网址檚 overnight rate target affect the prime rates at the big banks and in turn the rates Canadians pay for variable-rate mortgages and other floating-rate loans.
The Bank of CanadaB次元官网网址檚 next interest rate decision is set for Jan. 22, when it will also update its outlook for the economy and inflation as part of its quarterly monetary policy report.
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Craig Wong, The Canadian Press
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