Bank of Canada Keeps Rate at 0.5%
CBJ – The Bank of Canada has kept its key overnight rate at 0.5% as had been expected by virtually all economists, save for one, who thought a quarter point cut might be in order. The reason for staying the course stems from a weaker currency and household spending that are leading a recovery from the shock of lower oil prices. Economic indicators for June actually showed a slight uptick, although the country went into a technical recession after posting two consecutive quarters of negative GDP growth.
Positive signs of recovery include the biggest two-month gain in exports since 2011 and creation of 193,300 jobs in the 12 months through August, defying the normal pattern of a recession.
The central bank says the lower dollar is helping Canada’s economy adjust to the drop in commodity prices, and to more recent questions about the global economy linked to signs of slower growth in China.