Published: Sun, March 10, 2019
Markets | By Otis Pena

Bank of Canada leaves interest rate unchanged amid slowing economy

Bank of Canada leaves interest rate unchanged amid slowing economy

It also warned the first half of 2019 - and not just the first quarter as it had predicted in January - appeared to be on track for additional economic disappointment.

"Given the mixed picture that the data present, it will take time to gauge the persistence of below-potential growth and the implications for the inflation outlook", said the statement, which explained some of the factors behind the decision.

A lot of economic data have been disappointing, including exports, investment and consumption.

"Although we figured the economy was in for a detour at the end of previous year, that detour may wind up being longer than we had expected", she said in the speech, which was to be delivered to the Hamilton Chamber of Commerce.

The Canadian dollar lost almost half a cent after the central bank announced today that it is maintaining its key interest rate at 1.75 percent.

It made clear on Wednesday that future hikes were still on the table, but not imminent.

In New York, U.S. markets fell for a fourth straight day, losing more than two per cent over that period.

The Bank of Canada has raised its rates five times since July 2017, though it has held its overnight interest rate steady at 1.75 percent since October of previous year. Instead, growth slowed to 0.4 per cent.

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Last year, Irish designer Orla Kiely closed five retail stores as the fashion brand went into liquidation. The company's global operations are not included in the administration process, it also said today.


But it says the slowdown ended up being sharper and more broadly based than it had anticipated.

The Bank of Canada began paring back optimism for the outlook at the end of a year ago, and in January added the words "over time" to its forward-looking statements to signal that while rates will eventually rise, officials are in no rush.

Even if officials stick to an overall rate-hike story, they'll need to acknowledge the changed outlook.

Looking ahead, however, Patterson said the Bank of Canada is optimistic that economic growth will build new momentum in the second half of 2019, thanks in large part to the still-strong employment conditions and improving wages.

A benign interest rate environment in light of the central bank's decision Wednesday is supportive for those sectors, says Anish Chopra, managing director with Portfolio Management Corp.

The value of Canadian building permits fell by 5.5 per cent in January from December, Statistics Canada said.

"That could come in April", he added, when the central bank will release its next quarterly economic forecast. Trade tensions and uncertainty continue to dampen these components of growth.

Recent data suggest that the slowdown in the global economy has been more pronounced and widespread than the Bank had forecast in its January Monetary Policy Report(MPR). "It is hard to disentangle these confidence effects from other adverse factors, but it is clear that global economic prospects would be buoyed by the resolution of trade conflicts", said the bank.

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