The Bank of Canada is seen Wednesday September 6, 2017 in Ottawa.THE CANADIAN PRESS/Adrian Wyld

Bank of Canada keeps key rate target on hold, trims growth expectations for 2020

The central bank says in its latest forecast that the Canadian economy will grow by 1.6 per cent this year

The Bank of Canada is keeping its key interest rate target on hold at 1.75 per cent and forecasting a slower-than-expected start for the Canadian economy in 2020.

The central bank says in its latest forecast that the Canadian economy will grow by 1.6 per cent this year, down 0.1 of a percentage point from its projection in October.

While some of the slowdown late last year is being chalked up to a strike at CN Rail and an outage at the Keystone pipeline, the central bank says the weaker figures could also signal that global uncertainty is affecting Canada more than previously predicted.

The picture the bank painted in its report Wednesday was a sharp contrast from its last look at the economy, when a degree of domestic resilience remained in spite of weaker data points outside Canada’s borders.

There is “considerable uncertainty” about how long household spending may stay soft, the report said, as households are expected to be more cautious with their spending decisions and save more in the face of high levels of debt — all this despite a federal tax cut that kicked in on Jan. 1 and growth in wages.

The bank suggested weakness in the manufacturing sector and a tightening of provincial purse strings may have a dampening effect on the economy.

The report said ratification of the new North American free trade deal — a top priority for the Trudeau Liberals now that the U.S. and Mexico have completed their processes — and a partial trade detente between the United States and China should help stoke economic fires in Canada.

Growth for 2021 is forecast at two per cent, up from the bank’s October forecast of 1.8 per cent.

The outlook for the economy could change if the Trump administration follows through on threats to slap tariffs on France, Brazil and Argentina.

The report also cites as a risk ongoing tensions between the United States and Iran, which has already led to the tragic downing of a Ukrainian passenger jet with Canadians onboard. An escalation could roil the Middle East and likely increase the price of oil, leading to higher gas prices across the country.

ALSO READ: Meng’s lawyer argues at extradition hearing that fraud allegations are ‘facade’

The Canadian Press


Like us on Facebook and follow us on Twitter.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Comments are closed

Just Posted

Security guard assaulted in Kamloops park thanks police, public for quick arrest

Glen Warner, 71, was attacked on July 2 by a man who was asked by Warner to not smoke

Man found dead on Lake Country trail identified as Hollywood actor

GoFundMe campaign launched for man found dead at summit of Spion Kop

Innovation Centre prepares to open doors to Vernon co-workers

Former restaurant re-imagined to host ideas from Vernon’s ‘hidden’ home-based workforce

Missing Lake Country man found safe

The 65-year-old, reported missing July 4, has been located safe and sound

Sunflower Highway, art initiative to connect Fraser Valley, Thompson-Nicola and Okanagan

Sunflowers made out of reclaimed materials will be installed on public art trails

The pandemic is widening Canada’s workplace gender gap

Gender pay gap is incentivizing fathers to work while mothers watch children, a new B.C. study has found

Portraits celebrating Syilx culture now on display at Kelowna International Airport

Sheldon Pierre Louis’ art will be on display at YLW from now until July 2021

After slow start, Summerland sees more tourism activity

Majority of visitors come from within British Columbia

Deer and moose die after being chased by dogs in South Okanagan

BC conservation officers are asking the public to control their pets

3 people dead in Prince George motel fire

Fire personnel believe the blaze was suspicious although investigation in early stages

B.C. sets terms to review police, mental health, race relations

MLAs to recommend Police Act changes by May 2021

Trail RCMP officer accused of criminal harassment, forcible entry

BCPS: The charges against Murchie date between 2017 and 2020

LETTER: Customer service builds strong support

Company showed positive attitude and swift response

Most Read