Stephen Poloz, Governor of the Bank of Canada concludes a news conference concerning the rise of the bank’s interest rates, in Ottawa, Tuesday July 12, 2017. (Fred Chartrand/The Canadian Press)

Central bank holds rate, notes ‘increased uncertainty’ on timing of future hikes

Central bank’s trend-setting interest rate is staying at 1.75 per cent for a third-straight announcement

The Bank of Canada left its key interest rate unchanged Wednesday and pointed to ”increased uncertainty” about the timing of future rate hikes following the economy’s abrupt deceleration in late 2018.

The central bank’s trend-setting interest rate is staying at 1.75 per cent for a third-straight policy announcement — a stretch that comes after governor Stephen Poloz introduced five rate hikes between mid-2017 and last fall.

Notably, the bank’s statement Wednesday dropped language from its release in January that said the governing council expected the rate would need to rise over time to an estimated destination range of between 2.5 and 3.5 per cent.

“Given the mixed picture that the data present, it will take time to gauge the persistence of below-potential growth and the implications for the inflation outlook,” said the statement, which explained some of the factors behind the decision.

“With increased uncertainty about the timing of future rate increases, governing council will be watching closely developments in household spending, oil markets, and global trade policy.”

Last week, Statistics Canada released a report that showed the country, over the final three months of 2018, delivered its weakest quarter of economic growth in two and a half years. Economic growth slowed to an annualized pace of just 0.4 per cent.

In its statement Wednesday, the central bank said it had been expecting a drop in household spending as well as weak numbers for exports and investment in oil-producing provinces in the fourth quarter.

But it acknowledged the slowdown ended up being “sharper and more broadly based” than it had anticipated.

READ MORE: Bank of Canada holds interest rate, views oil slump as temporary soft patch

READ MORE: Bank of Canada says Canadians owe $2 trillion as it mulls next rate hike

The central bank had been warning Canadians to expect a soft patch in late 2018 and early 2019 primarily due to the steep drop in oil prices late last year.

Poloz noted in January that “as the snow melts, we’ll have a clearer view that the economy is back on track and then likely to grow above or around two per cent after that.”

A fresh economic start by spring no longer appears to be in the forecast.

The first half of 2019, the bank added, is now on track to produce weaker numbers than its projection two months ago.

“Consumer spending and the housing market were soft, despite strong growth in employment and labour income,” the statement said.

“Both exports and business investment also fell short of expectations.”

Statistics Canada said the late-2018 slowdown was mostly due to a 2.7 per cent contraction, on a quarter-over-quarter basis, in investment spending. Overall exports saw a slight decline and household spending slowed for a second straight quarter.

Heading into the decision Wednesday, the Bank of Canada was widely expected to leave the key interest rate untouched.

Many analysts have predicted the bank will wait until at least late 2019 before introducing another rate hike. There have also been doubts whether Poloz will raise the rate again this year — or whether his next move will even be a hike.

The central bank’s next policy decision is scheduled for April 24 when it will also update its economic outlook in its monetary policy report.

On Wednesday, the bank said the global economy’s deceleration has been more pronounced than expected — and more widespread.

The moderation, it added, has been caused in large part by concerns related to trade tensions and uncertainty. The bank, however, noted that global economic prospects would improve if ongoing trade conflicts are resolved.

The bank predicted inflation to stay slightly below its ideal two per cent target through most of the year.

Andy Blatchford, The Canadian Press

Like us on Facebook and follow us on Twitter.

Just Posted

Wind gust near Williams Lake blows off a deck roof

The roofing also hit power lines in front of the yard before landing on the road

WATCH: Williams Lake students strike over climate change concerns

Local student protesters joined others around the world looking for government to take action

Come dance away with the Whirlaways this weekend

The Williams Lake Square Dancers annual jamboree is this weekend

Scout Island connecting lakecity with creatures big and small

From whakes to incest larvae, Scout Island invites lakecity to expirence aquatic waterlife this week

Loring, Roberts ready to ride into Canadian High School Rodeo Finals

Two Williams Lake high school rodeo athletes will take their talents to the High School Finals

B.C.’s fight to regulate bitumen through pipelines to go to Canada’s top court

BC Appeal Court judges found B.C. cannot restrict bitumen flow along Trans Mountain pipeline

Scheer says it would take Conservatives five years to balance budget

Scheeraccused the Liberal government of spending $79.5 billion of previously unbudgeted funds

B.C. man, 30, arrested for driving his parents’ cars while impaired twice in one day

The Vancouver-area man was arrested after officers caught him driving impaired twice in one day

New airline regulations bring compensation for tarmac delays, over-bookings

Some of the new regulations will roll out in July, while others are expected for December.

More than half of Canadians support ban on handguns, assault rifles: study

Divide between rural and urban respondents in latest Angus Reid Institute public opinion study

Spring rain needed as B.C. sees one of the lowest snowpack levels in 40 years

Snowpack levels in B.C. recorded on May 15 were similar to those in 2015 and 2016

Theresa May to quit as party leader June 7, sparking race for new PM

The new Conservative leader will become prime minister without the need for a general election

B.C. man who fell off cliff returns there to rescue eagle from vulture attack

Nanaimo’s James Farkas, who broke his hip in a fall, saves eagle on same beach months later

Raptors beat Bucks 105-99 to move within 1 game of NBA Finals

Leonard scores 35 as Toronto takes 3-2 series lead over Milwaukee

Most Read