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Bank of Canada Holds Rate, Drops Bias for Future Hikes as Economy Stalls

Posted April 25, 2019

Under Economic Issues, International Trade Issues

(Kevin Carmichael – Financial Post)

Canadian interest rates are almost certainly on hold until at least sometime next year.

The Bank of Canada published a revised outlook on Wednesday that shows the economy stalled over the last six months, extinguishing the sparks that had caused policy makers to starting worrying about inflation.

Governor Stephen Poloz and his deputies left the benchmark rate unchanged at 1.75 per cent, as expected. They also erased from their policy discussion any suggestion that interest rates could rise in the foreseeable future, a pivot that suggests the pause that began in December is now a hiatus.

Poloz called it a “detour,” as the Bank of Canada’s revised forecast predicts the economy will rebound to growth of around two per cent in 2020. Still, he conceded at a press conference that the economy currently is so fragile that a negative shock would force policy makers to consider cutting interest rates. Click here to read more.


Bank of Canada: Monetary Policy Report – April 2019

Poloz Inverts Canada’s Yield Curve by Removing Rate-Hike Bias (Bloomberg)

Canadian Dollar Slides to Four-Month Low on More Dovish Bank of Canada (Reuters)

Boc’s Downgraded Outlook Exposes Canada’s Business-Investment Problem (Globe & Mail)

Bruised Canadian Dollar Could Slump Further Still (Globe & Mail)