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

Skeena Bulkley Valley MP calling for halt on sport fishing licenses to out-of-province fishers

Bachrach and Courtenay-Alberni MP Gord Johns co-signed the letter to the Minister of Fisheries

Museum colouring books are a big hit with families

Curator found them tucked away in a box

City says unlikely there will be a significant property tax reduction from proposed increase

One resident has asked the Town to consider reducing the proposed 7.4 per cent tax increase

Kitimat LNG Canada worker tests positive for COVID-19

The company announced the positive case to its workers on March 28

Bachrach to donate salary hike to community organizations

Skeena-Bulkley Valley MP among growing list of MPs giving raise away amid economic crisis

VIDEO: ‘Used gloves and masks go in the garbage,’ says irked B.C. mayor

Health officials have said single-use gloves won’t do much to curb the spread of COVID-19

COVID-19: postponed surgeries will be done, B.C. health minister says

Contract with private surgical clinic to help clear backlog

Black Press Media ad sparks discussion about value of community newspapers

White Rock resident hopes front-page note shines light on revenue loss during COVID-19 crisis

53 new COVID-19 cases in B.C., four new deaths

B.C. has 498 active confirmed cases of the novel coronavirus

Don’t stop going to the doctor, just do it virtually: B.C. association

Doctors encourage patients to access telephone, online visits

Businesses advised to prepare for federal, B.C. COVID-19 assistance

Canada Revenue Agency portal expected to open next week

‘Drive right through’: Haida Gwaii First Nation erects checkpoint for non-residents

Skidegate Band Council Emergency Operations Centre erected checkpoint on April 2

Dogs are property, not kids, B.C. judge tells former couple

Court decision made on competing lawsuits over Zeus and Aurora — a pit bull and pit bull cross

Most Read