Interest Rate in Canada
Canada - Interest Rate
Bank of Canada leaves rates unchanged in July amid elevated trade tensions
On 10 July, the Bank of Canada (BoC) left its target for the overnight rate unchanged at 1.75% as had been widely expected by market analysts.
The Bank’s decision to stand pat was reinforced by signs that growth picked up in the second quarter, supported by stronger oil output, and the Bank now sees Q2’s outturn as stronger than previously anticipated. Moreover, the economy should benefit in coming months from a robust labor market and a recovery in the housing sector. As a result, additional monetary stimulus was not warranted, despite ongoing trade tensions, which the BoC judged are having a “material effect on the global economic outlook”. Moreover, although inflation has risen in recent months, the Bank expected gasoline price movements to dampen price pressures in the months ahead. Under-control inflation thus gave the BoC the leeway to adopt a wait-and-see approach.
Going forward, the Bank gave no explicit guidance on the future direction of interest rate movements, although the tone of the communiqué was arguably slightly more dovish than at the prior meeting, with greater emphasis placed on the impact of the trade war. Most panelists see rates staying unchanged for the rest of the year.
According to Brian DePratto, an economist at TD Economics: “Today’s statement supports our view of a Bank of Canada that will stand pat as the domestic economy settles back to a roughly trend pace of growth. They would likely need to see more of the downside risks materialize in hard data to alter that position, with trade tensions topping the list of being a global catalyst.”
The Bank’s next monetary policy announcement is scheduled for 4 September.
FocusEconomics Consensus Forecast analysts see the target for the overnight rate ending 2019 at 1.73%. For 2020, analysts expect the target for the overnight rate to end the year at 1.79%.
Canada - Interest Rate Data
|Policy Interest Rate (%)||1.00||1.00||0.50||0.50||1.00|
5 years of economic forecasts for more than 30 economic indicators.
Canada Interest Rate Chart
Source: Bank of Canada.
|Bond Yield||1.49||1.00 %||Jul 30|
|Exchange Rate||1.32||0.15 %||Jul 31|
|Stock Market||16,407||0.23 %||Jul 31|
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August 21, 2019
Consumer prices increased a seasonally-adjusted 0.4% from a month earlier in July, contrasting June’s 0.1% fall.
August 20, 2019
House prices increased 0.7% on a monthly basis in July, according to the Teranet-National Bank Composite House Price Index, down slightly from June’s 0.8% gain.
August 9, 2019
Housing starts on a seasonally-adjusted annualized rate (SAAR) basis fell to 222,013 units in July, according to the Canada Mortgage and Housing Corporation (CMHC), down from June’s revised 245,455-units reading (previously reported: 245,657) but beating market expectations.
August 1, 2019
In July, the IHS Markit Manufacturing Purchasing Managers’ Index (PMI) jumped to 50.2 from 49.2 in June.
July 31, 2019
The economy expanded 0.2% month-on-month in May, slightly down from April’s 0.3% increase but beating analysts’ expectations of a 0.1% expansion.