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Bank of Canada holds rates steady

By The IJ Staff | October 30 2019 01:00PM

The Bank of Canada announced on Oct. 30 that it is maintaining its target overnight rate at 1.75 per cent. Overall, the bank says growth in Canada is expected to slow in the second half of this year and business investments and exports are likely to contract before expanding again in 2020 and 2021.

On the brighter side, employment numbers are showing continuing strength and wage growth is picking up, with some variation among regions. Although consumer spending has been choppy, it will likely be supported by solid income growth going forward.

Overall, the bank says growth in the global economy has weakened since July when it last published its Monetary Policy Report, thanks to ongoing trade conflicts and uncertainty that are restraining business investment, trade and global growth. While a growing number of countries have responded with policy measures to support their economies, the bank is still calling for global growth to slow to around three per cent this year before edging up again over the next two years.

In Canada, the bank projects real GDP will grow by 1.5 per cent this year, 1.7 per cent in 2020 and 1.8 per cent in 2021. CPI inflation, meanwhile, will likely dip temporarily in 2020 as the effect of a previous spike in energy prices fades, but will likely track close to the bank’s two per cent target going forward.

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