ZCZC
BCN-06
CANADA-BANK-RATE
Canada central bank holds key lending rate at 1.75%
OTTAWA, Dec 5, 2019 (BSS/AFP) – Canada’s central bank on Wednesday
maintained its key lending rate at 1.75 percent, saying it is cautiously
optimistic that global growth is set to rebound and recession fears are
“waning.”
“There is nascent evidence that the global economy is stabilizing,” the
Bank of Canada said in a statement, adding that growth was “expected to edge
higher over the next couple of years.”
Financial markets, it said, have been bolstered by “waning recession
concerns” despite being “buffeted by news on the trade front.”
Earlier, Wall Street stocks rose on upbeat reports on US-China trade
talks.
Worries about the on-again off-again negotiations have pressured stocks in
recent days, leading to three straight declines.
But analysts cited a Bloomberg News report that characterized Washington
and Beijing as near finalizing a partial trade agreement that would avert new
tariffs threatened for later this month.
While others around the world, including the US Federal Reserve, have cut
rates in recent months in an attempt to stimulate their economies and head
off a global downturn, the Bank of Canada’s main lending rate has stood at
1.75 percent since October 2018.
It noted that ongoing trade conflicts and “related uncertainty are still
weighing on global economic activity, and remain the biggest source of risk
to the outlook.”
Canada’s economy slowed in the third quarter to 1.3 percent as exports
fell, but consumer spending, housing and business investment have been
strong.
Inflation also remains near the central bank’s 2.0 percent target, which
it said was “consistent with an economy operating near capacity.”
CIBC analyst Andrew Grantham commented that the bank’s overall statement
was “a little more hawkish than markets were expecting.”
That tone, he said in a research note, suggests that any proposals for a
rate cut in the near-term are “pretty firmly on hold for now.”
As it mulls an increase or decrease in rates in 2020, the bank said it
would watch closely “the adverse impact of trade conflicts against the
sources of resilience in the Canadian economy.”
BSS/AFP/HR/0940