ZCZC
BCN-13
CANADA-BANK-RATE
Canada’s central bank holds benchmark rate at 1.75%
OTTAWA, April 24, 2019 (BSS/AFP) – Canada’s central bank announced
Wednesday it was keeping its key lending rate unchanged at 1.75 percent,
pointing to slower than expected global economic growth.
The bank, which last raised the rate in October, said in a statement that
“an accommodative policy interest rate continues to be warranted,” as it
scales back its estimate for Canadian economic growth in 2019 to 1.2 percent
from 1.7 percent in January.
The revision follows the sudden slowdown in the Canadian economy at the
end of last year, with a 0.4 annualized rate increase in the fourth quarter
and disappointing early 2019 results.
“Ongoing uncertainty related to trade conflicts has undermined business
sentiment and activity, contributing to a synchronous slowdown across many
countries,” the Bank of Canada said in a statement, referring to ongoing
trade negotiations since January between China and the United States.
“In response, many central banks have signaled a slower pace of monetary
policy normalization,” Bank of Canada said.
“Financial conditions and market sentiment have improved as a result,
pushing up prices for oil and other commodities.”
It forecast that global economic activity would pick up later this year.
“Last year’s oil price decline and ongoing transportation constraints have
curbed investment and exports in the energy sector,” the bank said in
explaining the forecast for slower-than-expected growth in Canada in the
first half of 2019.
“Investment and exports outside the energy sector, meanwhile, have been
negatively affected by trade policy uncertainty and the global slowdown.
Weaker-than-anticipated housing and consumption also contributed to slower
growth.”
But the bank also anticipated faster growth, starting in the second
quarter.
“Outside of the oil and gas sector, investment will be supported by high
rates of capacity utilization and exports will expand with strengthening
global demand,” it said.
BSS/AFP/HR/0950