Interest rates hold steady
BANK OF CANADA SIGNALS HIKES ARE ON THE HORIZON
The Bank of Canada stuck with its trendsetting interest rate Wednesday — but it offered fresh, yet cautious, warnings to Canadians that increases are likely on the way. The central bank has now left the rate locked at one per cent for two straight policy announcements after the strengthening economy prompted it to raise it twice in the summer.
In announcing its latest decision, the bank pointed to several recent positives that could support higher rates in the coming months. They included encouraging job and wage growth, sturdy business investment and the resilience of consumer spending despite higher borrowing costs and Canadians’ heavy debt loads.
On top of that, there’s increasing evidence in the economic data that the benefits from government infrastructure investments have begun to work their way through the economy, the bank said.
But on the other hand, the bank noted exports had slipped more than expected in recent months after a powerful start to the year, although it continues to predict trade growth to pick up due to rising foreign demand.
It also said the international outlook continues to face considerable uncertainty mostly because of geopolitical- and traderelated factors.
“While higher interest rates will likely be required over time, (the bank’s) governing council will continue to be cautious,” the bank said in a statement Wednesday that accompanied its decision.
It will be “guided by incoming data in assessing the economy’s sensitivity to interest rates, the evolution of economic capacity and the dynamics of both wage growth and inflation.”