The Bank of Canada announced today that it is maintaining its overnight target rate at 1.75 per cent, leaving the rate unchanged since October 2018.

The bank says growth in Canada slowed in the third quarter of 2019 to 1.3 per cent. Consumer spending expanded moderately during that time, helped by stronger wage growth. Exports contracted, driven by non-energy commodities, while investment spending showed unexpected, strong growth, notably in transportation equipment and engineering projects. The banks says it will continue to monitor the evolution of financial vulnerabilities related to the household sector.

Recession concerns waning

Globally, it says there is evidence that the global economy is stabilizing with growth expected to edge higher over the next few years. Although financial markets are being buffeted by news on the trade front, the bank adds that financial markets have been supported by central bank actions and by waning recession concerns. “Ongoing trade conflicts and related uncertainty remain the biggest source of risk to this outlook,” they write. “In this context, commodity prices and the Canadian dollar have remained relatively stable.”

“Based on developments since October, governing council judges it appropriate to maintain the current level of the overnight rate target,” they add. “Future interest rate decisions will be guided by the bank’s continuing assessment of the adverse impact of trade conflicts against the sources of resilience in the Canadian economy – notably consumer spending and housing activity.”

The next scheduled date for announcing the overnight rate target is January 22, 2020.