Published: Sun, March 10, 2019
Business | By Eloise Houston

The Bank of Canada March 2019 rate statement

The Bank of Canada March 2019 rate statement

"It's primarily being driven off of the fact that we had weak Canadian GDP numbers come out and that was followed by the Bank of Canada using statements such as the path of future rates is now more uncertain", he said in an interview.

"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. Consequently, the bank found the economy in the first half of 2019 to be weaker than originally forecast.

"It will take time to gauge the persistence of below-potential growth", said the BoC in its March 6 press release.

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

Stephen Poloz, the governor, and his deputies on the Governing Council expected slower global economic growth, but the slowdown has been "more pronounced and widespread" than forecast in January, the central bank said in its latest policy statement.

The central bank made it clear that future rate hike plans are still on the table, but not imminent.

Canada's main stock index edged higher on Wednesday, after the Bank of Canada kept interest rates unchanged in line with expectations in the wake of a broad economic slowdown.

To be sure, Statistics Canada reported late in February that non-residential investment will rise 2.5 per cent in 2019, according to a survey of companies, compared with increases of 2.5 per cent past year and 4.3 per cent in 2017.

Similarly, they assumed Canada's economy would stumble, but the fall in the fourth quarter was "sharper and more broadly based" than they predicted, the statement said.

"Consumer spending and the housing market were soft, despite strong growth in employment and labour income", the bank said Wednesday. Overall exports saw a slight decline and household spending slowed for a second straight quarter.

When asked if the central bank was anxious those rules would push unqualified buyers to seek loans on the secondary mortgage market, Patterson said it was to be watched and would be a concern "if that part of the market becomes too large".

The bank says the first half of 2019 is now on track to produce weaker numbers than its projection two months ago - and that governing council needs more time to assess what has become a mixed picture. "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.

Investment probably is being impeded by trade policy; the new North American free-trade agreement remains unratified, and U.S. President Donald Trump's trade war with China and others has spread fear throughout the global economy.

The bank's measures of core inflation remain stable and very close to the 2 percent target even as official inflation fell to 1.4 percent in January because of lower gas prices.

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