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

Just Posted

Bachrach rejects calls for police action against demonstrators

Skeena-Bulkley Valley MP says only way out of crisis is “true nation-to-nation” talks

Coast Mountain College appoints a new president

The promotion came from within the school

Coastal GasLink pipeline investor committed to closing deal despite protests

Developer TC Energy Corp. — formerly TransCanada Corp. — is to remain the operator of the $6.6-billion pipeline

College finds a new president

Promotion comes from within

Blending traditional art with realistic life-form

Haida Gwaii artist, Josh Davidson on display at ANBT

Blair says RCMP have met Wet’suwet’en conditions, so barricades should come down

The Wet’suwet’en’s hereditary chiefs oppose the Coastal GasLink project

B.C., federal ministers plead for meeting Wet’suwet’en dissidents

Scott Fraser, Carolyn Bennett standing by to return to Smithers

B.C. mom’s complaint about ‘R word’ in children’s ministry email sparks review

In 2020, the ‘R’ word shouldn’t be used, Sue Robins says

New Jamie Bacon trial for counselling to commit murder charge set for March 3

The trial is set to start on March 3 at B.C. Supreme Court

Federal minister pledges to meet Wet’suwet’en chiefs in B.C. over natural gas pipeline

The Wet’suwet’en hereditary chiefs say they are visiting Mohawk territory

2010 leader John Furlong urges Vancouver to bid for 2030 Winter Games

VANOC said the 2010 games broke even financially

Pipeline dispute: Tories put no-confidence motion on House of Commons agenda

Conservatives say they have no confidence in the Trudeau government to end the rail blockades

Canadians aboard coronavirus-ridden cruise ship to return home tonight

Among the infected are 47 Canadians who will have to remain in Japan for treatment

Most Read