The country’s central bank held its trend-setting interest rate steady at 0.5 per cent, the Bank of Canada said Wednesday. The central bank’s outlook for the country to post modest growth this year remains “intact,” it said.
The consensus of economists was that the central bank would keep its trend-setting policy rate unchanged following two cuts to its key rate earlier this year as the economy slid alongside plummeting oil prices.
“The stimulative effects of previous monetary policy actions are working their way through the Canadian economy,” a statement from the Bank of Canada said.
The bank’s latest rate announcement comes after a string of better-than-expected Canadian economic data last week.
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“The domestic economic data are the most compelling reason for the BoC to stay on the sidelines,” Benjamin Reitzes, an economist at Bank of Montreal, said.
“June blew away expectations, with preliminary July figures looking decent,” Reitzes said.
However, continued weakness in oil prices and the turmoil on global stock markets amid fears about the Chinese economy are expected raise concerns for the central bank.
The Bank of Canada has already cut its target for the overnight rate twice this year, most recently in July when it also downgraded its outlook for the Canadian economy.
Since then, Statistics Canada reported the economy contracted at an annual pace of 0.5 per cent in the second quarter, in line with the Bank of Canada’s expectations.
— With files from Global News
The Canadian Press