Reflecting the realities of the current economic climate, the Bank of Canada opted not to change its benchmark interest rate from its current level of 1.25 per cent.
In a statement it hinted at concern over growing trade protectionism in justifying the decision to not raise rates again this time around.
The caution sent the loonie lower, losing about half a cent after the decision came out to dip below 77 cents US.
The loonie later gained back much of the day’s losses amid word from the White House that Canada and Mexico may get exemptions from pending U.S. tariffs on steel and aluminum.
The bank noted disappointing Canadian GDP numbers, which have showed the Canadian economy expanded at an annual pace of just 1.6 per cent in the last half of 2017 — less than half the pace seen in the first half.
And the bank mentioned a slowdown in the housing market. It remains to be seen whether the slowdown will last, but if the slowdown continues for too long, the effect could reverberate through the economy.
Eight times a year, the central bank meets to discuss its benchmark interest rate, known as the target for the overnight rate, which is the rate that banks charge each other for overnight loans.
The bank’s next meeting is scheduled for April 18. Trading in investments known as overnight index swaps implies that traders think there is a 33 per cent chance of a rate hike at that meeting. – CINEWS