Bank of Canada keeps interest rates steady, cites uncertainty

OTTAWA — Despite some obvious rough patches in the economy, the Bank of Canada appears content to ride over them for the next few months — and perhaps a lot longer.

Governor Stephen Poloz and his policy team reinforced that view on Wednesday, choosing to keep their trendsetting interest rate on hold at 0.5 per cent while acknowledging that the economy is still facing a “complex and lengthy adjustment.”

“This was a steady-as-she-goes message, in line with data that have tracked closely to the last BoC forecast,” said Avery Shenfeld, chief economist at CIBC World Markets.

But while the economy appears to have recovered from a recession in the first half of 2015 — if growth of 2.3 per cent in the third quarter is any indication — there are still concerns growth could stumble again as the impact of the collapse in global oil prices continues to be felt in Canada’s resources-dependent provinces.

One lightning rod can be found in the September data: Output fell in the last month of an otherwise positive third quarter, providing a weak handoff for the October-to-December period.

“In Canada, the dynamics of growth have been broadly in line” with the central bank’s October outlook, policymakers said Wednesday in a statement.

“The economy continues to undergo a complex and lengthy adjustment to the decline in Canada’s terms of trade,” the bank said.

“The U.S. economy continues to grow at a solid pace, although private domestic demand has proven slightly less robust than expected. Meanwhile, commodity prices have declined further.”

The bank’s October rate decision highlighted the “uncertainty” over the transition of the world’s second-largest economy to a “slower growth path” — a move that has placed “downward pressure on prices for oil and other commodities.”