Bank of Canada keeps overnight rate target unchanged
Ottawa, Dec 5 (IBNS): The Bank of Canada has kept the overnight rate target unchanged at 1.75 per cent, media reports said.
The central bank said the timing of future hikes will be dependent on several factors. The factors include the longevity of oil-price slump, business investments and growth of economy.
The bank had raised the benchmark five times since 2017. It also said the data reflects that economy has less momentum as the financial year 2018 is heading into the last quarter.
Statement of Bank of Canada:
The Canadian economy as a whole grew in line with the Bank’s projection in the third quarter, although data suggest less momentum going into the fourth quarter. Business investment fell in the third quarter, in large part due to heightened trade uncertainty during the summer.
Business investment outside the energy sector is expected to strengthen with the signing of the USMCA, new federal government tax measures, and ongoing capacity constraints. Along with strong foreign demand, this increase in productive capacity should support continued growth in exports.
Household credit and regional housing markets appear to be stabilizing following a significant slowdown in recent quarters. The Bank continues to monitor the impact on both builders and buyers of tighter mortgage rules, regional housing policy changes, and higher interest rates.
Inflation has been evolving as expected and the Bank’s core measures are all tracking 2 per cent, consistent with an economy that has been operating close to its capacity. CPI inflation, at 2.4 per cent in October, is just above target but is expected to ease in coming months by more than the Bank had previously forecast, due to lower gasoline prices.
Downward historical revisions by Statistics Canada to GDP, together with recent macroeconomic developments, indicate there may be additional room for non-inflationary growth. The Bank will reassess all of these factors in its new projection for the January MPR.
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