Trend-setting interest rate remains the same

As of March 8th, the Bank of Canada has kept its trend-setting Bank Rate at 1.25% making this the 12th consecutive policy meeting where borrowing costs remain unchanged.

According to the Bank, the previous heightened uncertainty about the global economic outlook has decreased over the last couple of months. Growth within the global economy is expected to grow at a slower pace, below its long-term average. U.S. growth is moving along at a moderate pace with recent signs of improvement in the labour market and though China’s economy is slowing, it’s rate of growth is still high.

Commodity prices are currently higher than originally forecasted, and specifically the price of oil has risen higher. The outlook on the Canadian economy has improved slightly since the last report. Household spending by Canadians is expected to remain high.

“Financial markets still expect interest rates to be hold until well into next year, and today’s announcement confirms the Bank is perfectly happy to sit on the sidelines, and is no closer to raising rates now than it was in January,” said CREA Chief Economist Gregory Klump.

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Mary O'Brien

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