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Bank of Canada Holds Rates and Flags Global Growth Concerns

Sep 04, 2019

Ottawa, September 4, 2019— "Global trade tensions are clearly top of mind for Bank of Canada policy makers. This morning's communication started and ended with a reference to global trade tensions." says Alicia Macdonald, The Conference Board of Canada’s Principal Economist. “The Bank of Canada held its overnight rate at 1.75 per cent this morning. While domestic conditions are currently strong, Canada is not immune to the effect of slowing global growth. The Bank of Canada will be carefully monitoring trade tensions and assessing how they will impact the Canadian economic outlook in the lead up to its next policy decision.”


  • The Bank of Canada maintained its target for the overnight rate at 1.75 per cent this morning.
  • Despite the increasingly grim outlook for global trade and growth prospects, the Bank did highlight some positive domestic data, noting that inflation was at target, the economy was operating close to its underlying potential and that wage growth has accelerated.
  • The Bank is also keenly aware of the impact that further monetary stimulus could have on highly leveraged households, noting that lower mortgage rates had precipitated a stronger-than-expected rebound in the housing sector, which could add to already high household debt levels.
  • One important factor that the Bank flagged was the sharp pullback in business investment in the second quarter. In our opinion, the impact that escalating trade tensions will have on future investment decisions is key to the Bank of Canada’s next move.
  • For years, the Bank has been waiting for business investment and non-energy exports to pick up and take some of the pressure off consumers to drive economic growth. We are currently updating our economic forecast which will be released on September 17. Our expectations for how the global economic slowdown will affect Canadian growth will determine if the Bank of Canada needs to add more stimulus to achieve its inflation target.



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