Central bank holds interest rate at 1.75

The Bank of Canada left its trend-setting interest rate untouched Wednesday as fresh economic developments — including the sharp drop in oil prices — threatened to delay future hikes.

The central bank’s decision Wednesday maintained its trend-setting rate at 1.75 per cent. It followed a quarter-point increase at the bank’s previous policy meeting in October.

Thanks to the strengthened economy, the bank has been on a gradual rate-hiking path for more than a year and has already raised the benchmark five times since the summer of 2017.

But the timing of upcoming rate increases, the bank said, will now depend on several new factors that have emerged in recent weeks. The elements include the extent of the crude-price slump, the ability of corporate investment to pick up its pace and how much room the overall economy still has left to grow without stoking inflation.

“(They) will also factor importantly into our decisions about the future stance of monetary policy,” the bank said Wednesday in a statement.

The new considerations add to other factors the bank has been studying to determine just how quickly it should raise the rate.

The bank repeated Wednesday that future hikes also hinge on changes in global trade policies.

The central bank raises the interest rate to prevent inflation from climbing too high. The Bank of Canada has estimated it will need to gradually raise the interest rate until it reaches a level between 2.5 and 3.5 per cent.

Heading into Wednesday’s announcement, however, market watchers had widely expected governor Stephen Poloz to hold off until at least his January meeting before introducing the next rate increase.