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

Masset RCMP seize ‘substantial’ amount of guns, cash in Friday the 13th drug bust

Officers executed search warrant on March 13 at ‘suspicious’ Old Massett Village residence

‘It makes people feel cared for’: Haida Gwaii food bank cooks up new freezer meal service

Containers needed for meals for vulnerable people, those in self-isolation amid COVID-19

BC Ferries able to restrict travel for sick passengers

Ferries working on schedule shifts to keep workers safe

Haida Gwaii libraries launch new online sign-up service, 24/7 WiFi

Residents without library cards can now sign up online, access eLibrary

Canadian ferry operators call for inclusion in COVID-19 travel restrictions

Domestic travel restrictions should include ferries, operators say

B.C. records five new COVID-19 deaths, ‘zero chance’ life will return to normal in April

Province continue to have a recovery rate of about 50 per cent

John Horgan extends B.C.’s state of emergency for COVID-19

Premier urges everyone to follow Dr. Bonnie Henry’s advice

B.C.’s first community COVID-19 death was dentist ‘dedicated’ to health: lawyer

Vincent was 64 when he died on March 22 after attending the Pacific Dental Conference

Two inmates at prison housing Robert Pickton test positive for COVID-19

Correctional Service of Canada did not release any details on the identities of the inmates

BC SPCA launches matching campaign to help vulnerable animals after big donations

Two BC SPCA donors have offered up to $65,000 in matching donations

Quarantined B.C. mom say pandemic has put special-needs families in ‘crisis mode’

Surrey’s Christine Williams shares family’s challenges, strengths

Anti-tax group calls for MPs, senators to donate scheduled pay raises to charity

Bill C-30, adopted 15 years ago, mandates the salary and allowance increases each calendar year

Two arrested after man lies about COVID-19 illness to stay in Victoria Airbnb for free

Victoria Police found stolen goods inside the occupied unit

Liberals delay release of 75% wage subsidy details, costs: Morneau

Program will provide up to $847 per week for each worker

Most Read