As expected, the Bank of Canada held interest rates steady as expected on Wednesday but warned that the ongoing U.S.-China trade war was doing more damage to the global economy than it had forecasted back in July.
The central bank — which has sat on the sidelines since last October — maintained its key overnight rate at 1.75 per cent and made no mention of future moves. The current level of stimulus remained appropriate, it said, reiterating the pace of Canadian economic growth would slow down in the second half of the year.
The negative effects of the trade conflict between the United States and China were “weighing more heavily on global economic momentum than the Bank had projected in its July Monetary Policy Report,” it said.
The next rate announcement comes on October 30 and at that point the BoC has indicated that it would carefully review the impact of global developments on the broader Canadian economy.
A Reuters poll released last week found economists were divided on whether the bank would cut rates this year or hold off until early 2020.
Currently inflation hovers at around the central bank‘s 2 per cent target.
But there are storm clouds that suggest the economy could be in for a slowdown despite a statistic released last week which showed the national economy grew a surprising 3.7 per cent in the second quarter, nearly 1.5 per cent higher than the expected 2.3 per cent. -CINEWS