Bank of Canada keeps policy rate unchanged at 1.75%

Eren Sengezer FXStreet

As widely expected, the Bank of Canada maintained its target for the overnight rate at 1.75%. Below are some key takeaways from the BoC's policy statement.

The global economic expansion continues to moderate, with growth forecast to slow to 3.4 per cent in 2019 from 3.7 per cent in 2018.
There are increasing signs that the US-China trade conflict is weighing on global demand and commodity prices.
The drop in global oil prices has a material impact on the Canadian outlook, resulting in lower terms of trade and national income.
Consumption spending and housing investment have been weaker than expected as housing markets adjust to municipal and provincial measures, changes to mortgage guidelines, and higher interest rates.
The Bank projects real GDP will grow by 1.7 per cent in 2019, 0.4 percentage points slower than the October outlook.
Core inflation measures remain clustered close to 2 per cent. As expected, CPI inflation eased to 1.7% in November, due to lower gasoline prices.
Weighing all of these factors, Governing Council continues to judge that the policy interest rate will need to rise over time into a neutral range to achieve the inflation target.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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