(Canada Press)

(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

Black Press file photo
RCMP seek suspect in Vancouver Island-wide crime spree

Crimes stretched from Deep Bay to Qualicum, Ladysmith, Chemainus and Youbou

Things are looking up for Vancouver Island as zero COVID-19 cases have been reported for the first time since October. THE CANADIAN PRESS/Darryl Dyck
Island records zero new COVID-19 cases for the first time since October

For the first time since October, the province is reporting zero new… Continue reading

The remains of the Mid-Island Co-op in Whiskey Creek along the Alberni Highway on Friday, June 18, after a blaze the day before devastated the gas station. (Michael Briones photo)
VIDEO: Whiskey Creek gas station destroyed by fire after camper van explosion

Nine fire departments responded to the incident, no injuries reported

New Vancouver Island University chancellor Judith Sayers was sworn in at a virtual ceremony June 17. (Submitted photo)
VIU’s new chancellor seeks innovation and equality in post-secondary education

Judith Sayers officially sworn in as Vancouver Island University chancellor

A small pod of Pacific white-sided dolphins pass by close to shore in Campbell River June 16, 2021. Still capture from video courtesy of Kimberly Hart
VIDEO: Dolphin sunset captured from Vancouver Island shore

Spectacular setting for view of travelling pod of Pacific white-sided dolphins

Bruce Springsteen performs at the 13th annual Stand Up For Heroes benefit concert in support of the Bob Woodruff Foundation in New York on Nov. 4, 2019. (Greg Allen/Invision/AP)
Canadians who got AstraZeneca shot can now see ‘Springsteen on Broadway’

B.C. mayor David Screech who received his second AstraZeneca dose last week can now attend the show

New research suggests wolves can be steered away from the endangered caribou herds they prey on by making the man-made trails they use to hunt harder to move along. THE CANADIAN PRESS/Nathan Denette
Culling cutlines, not B.C. wolves, key to preserving caribou herds: researcher

The government has turned to killing hundreds of wolves in an effort to keep caribou around

Gary Abbott (left) and Louis De Jaeger were two of the organizers for the 2014 Spirit of the People Powwow in Chilliwack. Monday, June 21, 2021 is Indigenous Peoples Day. (Jenna Hauck/ Chilliwack Progress file)
Unofficial holidays: Here’s what people are celebrating for the week of June 20 to 26

Indigenous Peoples Day, Take Your Dog to Work Day, Onion Rings Day all coming up this week

Gwen Spencer Hethey with her uncle and mentor Major Frederick Richardson. (Courtesy of Greater Victoria Sports Hall of Fame)
‘She was a killer’: The B.C. woman who pioneered female sharpshooting

Gwen Spencer Hethey made military men ‘look like turkeys’ says her son

Central Okanagan Grade 12 grads are set to get $500 each after a more than $1 million donation from a Kelowna couple. (File photo)
B.C. couple donating $500 to every Grade 12 student in the Okanagan

Anonymous donors identified as Kelowna entrepreneurs Lance and Tammy Torgerson

Rita Coolidge played the main stage at Vancouver Island Musicfest in 2017. (Black Press file photo)
This year’s Vancouver Island MusicFest to virtually showcase beauty of Comox Valley

Returning July 9 through 11 with more than 25 hours of music performances

British Columbia’s premier says he’s received a second dose of the Oxford-AstraZeneca COVID-19 vaccine. (Twitter/John Horgan)
B.C. premier gets 2nd dose of AstraZeneca COVID-19 vaccine

John Horgan shared a photo of himself on social media Friday afternoon holding a completed vaccination card

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

Most Read