Bank of Canada holds interest rate

B OF C WARNS OF ‘SIGNIFICANT UNCERTAINTIES’

The Bank of Canada held its benchmark interest rate steady on Wednesday and warned that it is keeping a watchful eye on “significant uncertainties” weighing on the outlook for the economy.

The scheduled rate announcement arrived as the central bank tries to assess the direction of U.S. economic policy under President Donald Trump — and the potential fallout from any policy changes he makes.

The bank has said some U.S. proposals, which include a border tax and protectionist policies, would have “material consequences” for Canadian investment and exports.

In an unusually short statement, the Bank of Canada used strong language when referring to uncertainties, as it did in the news release that accompanied its last rate announcement on Jan. 18.

At that time, two days before Trump’s inauguration, the bank indicated that “uncertainty about the global outlook is undiminished, particularly with respect to policies in the United States.”

On Wednesday, the statement said it was “attentive to the impact of significant uncertainties weighing on the outlook.”

As widely expected, the trend-setting target for the bank’s overnight interest rate stayed at the same level it’s been since July 2015: 0.5 per cent.

In explaining the decision by Governor Stephen Poloz’s council, the bank said improvements seen in recent economic data releases have been consistent with its projections.

The central bank also expects growth in the fourth quarter of 2016 — as measured by real gross domestic product — might come in slightly stronger than predicted because of recent consumption and housing data releases. Statistics Canada is scheduled to release those GDP figures today.