Bank Rate Remains at 0.5%
CBJ — The Bank of Canada is keeping its trendsetting interest rate at 0.5%.
In a statement, the central bank said while “uncertainty” continues for the global economy as a whole, the forecast for Canada’s largest trading partner, the U.S, is looking up — something that could imply a rate hike in the future.
The Bank of Canada will normally increase rates when attempting to influence a strong economy and tame inflation. In turn it cuts cuts rates when it wants to stimulate the economy.
The bank cut its benchmark interest rate twice in 2015 before standing on the sidelines through 2016.
Bank of Canada Governor Stephen Poloz and his team are attempting to figure out the impact of the impending Trump administration into its forecasts of Canada’s economic future.
In its Monetary Policy Report the bank projected Canadian GDP growth of 2.1% in 2017, a slight upwards revision from its previous projection.
That growth outlook includes an assumption that Donald Trump’s expected stimulus to the U.S. economy “boosts demand for Canadian exports and supports business confidence in Canada.”