Central bank says no rate cut considered amid stronger growth

The head of the Bank of Canada said an interest-rate cut was not on the table during the central bank’s latest policy decision, but also warned of persistent risks that suggest it will not hike anytime soon.

The central bank held its trendsetting rate unchanged on Wednesday following an early2017 run of data that exceeded its expectations.

“In this context, given the data we’ve seen in the last few months, I can say quite clearly, ‘No, a rate cut was not on the table at this time,’ ” bank governor Stephen Poloz told reporters in Ottawa.

“As we’ve outlined, I think pretty bluntly, that given the circumstances we see, we’re decidedly neutral.”

In January, Poloz had left the door open to a possible rate cut, citing the uncertainty surrounding the U.S. trade agenda and the lacklustre state of the Canadian economy.

But following the string of solid numbers, the bank acknowledged the improvements Wednesday.

It’s now predicting real gross domestic product to expand at an annual rate of 2.6 per cent this year – up from its January forecast of 2.1 per cent.

A change in the bank’s outlook also suggested a rate hike could come sooner than the market had expected earlier this year.

The positive momentum prompted the Bank of Canada to speed up its timetable for the economy to return full capacity, which is now projected for early 2018.

“The data have been good the last few months and we’re really glad of it,” Poloz said. “It’s much nicer than having serial disappointment to report on.”