The Bank of Canada is seen Wednesday September 6, 2017 in Ottawa.THE CANADIAN PRESS/Adrian Wyld

Bank of Canada keeps key rate target on hold, trims growth expectations for 2020

The central bank says in its latest forecast that the Canadian economy will grow by 1.6 per cent this year

The Bank of Canada is keeping its key interest rate target on hold at 1.75 per cent and forecasting a slower-than-expected start for the Canadian economy in 2020.

The central bank says in its latest forecast that the Canadian economy will grow by 1.6 per cent this year, down 0.1 of a percentage point from its projection in October.

While some of the slowdown late last year is being chalked up to a strike at CN Rail and an outage at the Keystone pipeline, the central bank says the weaker figures could also signal that global uncertainty is affecting Canada more than previously predicted.

The picture the bank painted in its report Wednesday was a sharp contrast from its last look at the economy, when a degree of domestic resilience remained in spite of weaker data points outside Canada’s borders.

There is “considerable uncertainty” about how long household spending may stay soft, the report said, as households are expected to be more cautious with their spending decisions and save more in the face of high levels of debt — all this despite a federal tax cut that kicked in on Jan. 1 and growth in wages.

The bank suggested weakness in the manufacturing sector and a tightening of provincial purse strings may have a dampening effect on the economy.

The report said ratification of the new North American free trade deal — a top priority for the Trudeau Liberals now that the U.S. and Mexico have completed their processes — and a partial trade detente between the United States and China should help stoke economic fires in Canada.

Growth for 2021 is forecast at two per cent, up from the bank’s October forecast of 1.8 per cent.

The outlook for the economy could change if the Trump administration follows through on threats to slap tariffs on France, Brazil and Argentina.

The report also cites as a risk ongoing tensions between the United States and Iran, which has already led to the tragic downing of a Ukrainian passenger jet with Canadians onboard. An escalation could roil the Middle East and likely increase the price of oil, leading to higher gas prices across the country.

ALSO READ: Meng’s lawyer argues at extradition hearing that fraud allegations are ‘facade’

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

Thousands of dollars of stolen rice traced to Langley warehouse

Police raid seizes $75,000 in ‘commercial scale’ theft case

VIDEO: Man collapses on Langley street

Multiple police, fire and ambulance units responded to incident outside Timms community centre

Langley thieves make off with $10,000 worth of remote control cars

Police are also investigating the theft of a pair of commemorative bridge plaques

19 times on 19th birthday: Aldergrove teen goes from crutches to conquering Abby Grind

Kaden Van Buren started at midnight on Saturday. By 3 p.m. he had completed the trek 19 times.

Cautious driving urged during South Langley toad migration

Thousands of toads are expected to hatch and head into the woods

Recent surge in COVID-19 cases not unexpected amid Phase Three of reopening: B.C.’s top doc

Keep circles small, wear masks and be aware of symptoms, Dr. Bonnie Henry says

UPDATE: Mission spray park closed after children suffer swollen eyes, burns

Mission RCMP are investigating incident that injured several children

B.C. NDP changing WorkSafeBC regulations to respond to COVID-19

Employers say reclassifying coronavirus could be ‘ruinous’

Baby raccoon rescued from 10-foot deep drainage pipe on Vancouver Island

‘Its cries were loud, pitiful and heartbreaking,’ Saanich animal control officer says

Statistical flaws led to B.C. wolf cull which didn’t save endangered caribou as estimated

Study finds statistical flaws in an influential 2019 report supporting a wolf cull

Surrey’s first Ethics Commissioner brings ‘objectivity’ to the job

Vancouver lawyer Reece Harding is Surrey’s first Ethics Commissioner, also a first for B.C.

Windows broken, racist graffiti left on Okanagan home

Family says nothing like this has happened since they moved to Summerland in 1980s

Professional basketball in Canada begins return to action with COVID-19 testing

Abbotsford’s Fraser Valley Bandits, six other CEBL teams arrive in Ontario for Summer Series

B.C. man who went by ‘Doctor Ray Gaglardi’ charged with sex assault of teenage boys

The man, 75, is accused of assaulting teenage boys he met through Coquitlam-area churches

Most Read