Bank of Canada holds rate steady for now as NAFTA uncertainty weighs
The only thing standing in the way of higher interest rates is the uncertain future of the North American Free Trade Agreement.
Canada’s central bank left its the official borrowing rate unchanged at 1.5 per cent on Wednesday, stating in the final sentence of the announcement that officials will be “monitoring closely the course of the NAFTA negotiations and other trade policy developments, and their impact on the inflation outlook.”
That line was notable for a couple of reasons.
First, it reflects the urgency of Canada’s talks with the Trump administration, which resumed in Washington at the same time the Bank of Canada updated its policy stance. Negotiators missed a deadline to complete an agreement by Aug. 31, although officials now appear to have decided they have more time. At stake for Canada is preferential access to the market that purchases about three-quarters of its exports.