(Canada Press)

Update: Bank of Canada holds interest rate at 1.75%

Dip in monthly GDP and lower-than-expected oil prices have dampened growth expectations

Update: 7:15 a.m.

The Bank of Canada left its interest rate unchanged today and says the timing of future hikes will depend on factors such as how long the oil-price slump lasts, how well business investment picks up its pace and how much room the economy still has left to grow.

The central bank is holding its trend-setting rate at 1.75 per cent in a decision that follows a quarter-point increase at its previous policy meeting in October.

The bank has been on a gradual rate-hiking path for more than a year thanks to a strengthening economy and has already raised the benchmark five times since the summer of 2017.

The bank says it will keep a close eye on the evolution of several recent developments as it considers the timing of its next rate hike — including a steep slide in oil prices that it predicts will reduce activity in Canada’s energy sector.

It also says recent data show that the economy has less momentum heading into the final quarter of 2018 related to factors such as a drop in business investment that the bank largely connects to trade uncertainty last summer.

The bank also notes it will be watching for positive developments such as signs the economy can still expand without stoking inflation.

The central bank can raise the interest rate to prevent inflation from climbing too high. Many market watchers had expected governor Stephen Poloz to wait until at least January before his next rate increase.

The Bank of Canada has estimated it will no longer need to increase the interest rate once it reaches a level of between 2.5 per cent and 3.5 per cent, but Poloz has said this destination range remains “sufficiently uncertain” and could move up or down.

Read more: Higher interest rates to hit younger, middle-income households

—-

Original:

The Bank of Canada is widely expected to leave its benchmark interest rate unchanged at 1.75 per cent today after a 25-basis-point increase at its last setting in October.

This morning’s announcement comes in the wake of a move by the Alberta government to curtail oil production in the province after Jan. 1 to try to clear a crude storage glut that has driven western Canadian oil prices to multi-year lows.

RELATED: Bank of Canada holds interest rate at 1.5 per cent in September

Meanwhile, the recently announced plan to close the General Motors of Canada car plant in Oshawa, Ont., similarly offers a downside risk to future growth.

Bank economists say an unexpected dip in monthly gross domestic product figures in September and lower-than-expected oil prices so far in the fourth quarter have dampened growth expectations and placed in doubt forecasts for a January bank rate increase.

Lower growth prospects are expected to reinforce Bank of Canada Governor Stephen Poloz’s strategy of moving very gradually on increases to its overnight rate.

Economists say they will be closely watching Poloz’s speech on Thursday for signs of how events are affecting his view of the path forward.

The Canadian Press

Like us on Facebook and follow us on Twitter.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Langford racing enthusiast back in driver’s seat of life after surviving aggressive cancer

70-year-old David Smith finishes mid-pack in Canada 200 race at Western Speedway

New nurse practitioner-led medical clinic welcomes Victoria patients

Health Care on Yates expects to serve 6,800 new patients over the next three years

Central Saanich needs at least more than 500 additional daycare spaces

Report before Central Saanich says region faces a ‘chronic shortage’ of daycare spaces

New branch of Royal BC Museum to be built in Colwood

New faclity in the Royal Bay development will house collections, archives and research department

MISSING: West Shore RCMP searching for 15-year-old last seen Sept. 13

Mackenzie Courchene still missing despite several tips, possible sightings, police say

3 new deaths due to COVID-19 in B.C., 139 new cases

B.C. confirms 40 ‘historic cases,’ as well

POLL: Do you plan on allowing your children to go trick or treating this year?

This popular annual social time will look quite different this year due to COVID-19

Supreme Court Justice Ruth Bader Ginsburg dies at 87

The court’s second female justice, died Friday at her home in Washington

Comox Valley protesters send message over old-growth logging

Event in downtown Courtenay was part of wider event on Friday

Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

Application deadline for fish harvester benefits program extended

Those financially impacted by the pandemic have until Oct. 5 to apply

Young Canadians have curtailed vaping during pandemic, survey finds

The survey funded by Heart & Stroke also found the decrease in vaping frequency is most notable in British Columbia and Ontario

VIDEO: B.C. to launch mouth-rinse COVID-19 test for kids

Test involves swishing and gargling saline in mouth and no deep-nasal swab

Most Read