(Canada Press)

Update: Bank of Canada holds interest rate at 1.75%

Dip in monthly GDP and lower-than-expected oil prices have dampened growth expectations

Update: 7:15 a.m.

The Bank of Canada left its interest rate unchanged today and says the timing of future hikes will depend on factors such as how long the oil-price slump lasts, how well business investment picks up its pace and how much room the economy still has left to grow.

The central bank is holding its trend-setting rate at 1.75 per cent in a decision that follows a quarter-point increase at its previous policy meeting in October.

The bank has been on a gradual rate-hiking path for more than a year thanks to a strengthening economy and has already raised the benchmark five times since the summer of 2017.

The bank says it will keep a close eye on the evolution of several recent developments as it considers the timing of its next rate hike — including a steep slide in oil prices that it predicts will reduce activity in Canada’s energy sector.

It also says recent data show that the economy has less momentum heading into the final quarter of 2018 related to factors such as a drop in business investment that the bank largely connects to trade uncertainty last summer.

The bank also notes it will be watching for positive developments such as signs the economy can still expand without stoking inflation.

The central bank can raise the interest rate to prevent inflation from climbing too high. Many market watchers had expected governor Stephen Poloz to wait until at least January before his next rate increase.

The Bank of Canada has estimated it will no longer need to increase the interest rate once it reaches a level of between 2.5 per cent and 3.5 per cent, but Poloz has said this destination range remains “sufficiently uncertain” and could move up or down.

Read more: Higher interest rates to hit younger, middle-income households

—-

Original:

The Bank of Canada is widely expected to leave its benchmark interest rate unchanged at 1.75 per cent today after a 25-basis-point increase at its last setting in October.

This morning’s announcement comes in the wake of a move by the Alberta government to curtail oil production in the province after Jan. 1 to try to clear a crude storage glut that has driven western Canadian oil prices to multi-year lows.

RELATED: Bank of Canada holds interest rate at 1.5 per cent in September

Meanwhile, the recently announced plan to close the General Motors of Canada car plant in Oshawa, Ont., similarly offers a downside risk to future growth.

Bank economists say an unexpected dip in monthly gross domestic product figures in September and lower-than-expected oil prices so far in the fourth quarter have dampened growth expectations and placed in doubt forecasts for a January bank rate increase.

Lower growth prospects are expected to reinforce Bank of Canada Governor Stephen Poloz’s strategy of moving very gradually on increases to its overnight rate.

Economists say they will be closely watching Poloz’s speech on Thursday for signs of how events are affecting his view of the path forward.

The Canadian Press

Like us on Facebook and follow us on Twitter.

Just Posted

Alberni student tells B.C. Supreme Court she wasn’t allowed to leave indigenous smudging ceremony

Girl cross-examined Monday in Nanaimo courtroom, case continues Tuesday

PHOTOS: Sold-out crowd enjoys BCHL game at the Brindy

Alberni Valley Bulldogs beat Trail Smoke Eaters 5-2

Port Alberni SPCA seeks help after senior cat attacked by dog twice

Nine-year-old tabby named Meow Meow will need her front leg amputated

Northbound lanes re-open along Malahat after small rockslide near Goldstream

Drivers asked to use caution, clean-up crews have finished on-site

Port Alberni cat stars in national fundraising calendar

Jax the cat was one of 13 pets selected from nearly 45,000 entries

Cold, stormy winter forecast across much of Canada, The Weather Network predicts

In British Columbia temperatures will be slightly above normal and precipitation will be just below normal

UPDATED: Vancouver Island’s Joe gets suspended sentence in Teddy the dog cruelty case

Melissa Tooshley expected in court on Thursday in same case

Nineteen boats carrying invasive mussels stopped at B.C. borders

Waters of Columbia-Shuswap still test mussel-free

Woman ‘horrified’ after being told to trek 200 kilometres home from Kamloops hospital

‘I can’t get from Kamloops back to 100 Mile House injured, confused… no shoes, no clothes whatsoever’

Canadian universities encourage exchange students in Hong Kong to head home

UBC said 11 of its 32 students completing programs in Hong Kong have already left

Midget no more: Sweeping division name changes coming to minor hockey in Canada

Alpha-numeric division names will be used for the 2020-2021 season and beyond

B.C. pushes for greater industry ‘transparency’ in gasoline pricing

Legislation responds to fuel price gap of up to 13 cents

B.C. woman ordered to return dog to ex-boyfriend for $2,000

After the two broke up, documents state, they agree to share custody of the dog, named Harlen

B.C. petition calls for seat belts in new school buses

Agassiz bus driver collects 124,000 signatures in support

Most Read