Interest Rate in Canada
Canada - Interest Rate
Bank of Canada leaves rates unchanged, cuts 2019 growth forecast by 0.4 percentage points
On 9 January, the Bank of Canada (BoC) left its target for the overnight rate unchanged at 1.75%, as widely expected by market analysts.
The decision to hold was reinforced by the recent fall in oil prices, the prospect of a global economic slowdown and uncertainty over global trade policy. In the Bank’s quarterly monetary policy report, Canada’s growth estimate for 2019 was cut 0.4 percentage points from the previous report to 1.7%. Moreover, recent housing data suggests new mortgage guidelines and higher interest rates have softened housing investment and private spending more than the Bank had anticipated. On the price front, inflation fell below the 2.0% target in November on low gasoline prices and is set to remain subdued in the months ahead according to the Bank. This reduced the need for an imminent rate hike.
The Bank highlighted its commitment to a neutral long-term target of between 2.50% and 3.50% for the overnight rate. However, the BoC kept a dovish stance in light of recent developments, promising to reach neutral territory “over time”, without setting any concrete timeline for future rate hikes.
Commenting on the BoC’s decision, Brian DePratto, senior economist at TD Economics, noted:
“No big surprise here. The rollercoaster ride of the past few months has brought a note of greater caution to the Bank of Canada's communications, and today’s decision looks to be an extension of that. Governor Poloz and company still see more rate hikes down the road, but aren’t in any great rush to get there.”
The Bank’s next monetary policy announcement is scheduled for 6 March.
Despite the impact of lower oil prices on inflation and demand, FocusEconomics Consensus Forecast panelists still see the BoC hiking rates this year, amid likely further tightening by the U.S. Federal Reserve. Our analysts see the target for the overnight rate ending 2019 at 2.33%. For 2020, analysts expect the rate to end the year at 2.41%.
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||1.97||1.00 %||Jan 15|
|Exchange Rate||1.33||0.15 %||Jan 16|
|Stock Market||15,111||0.23 %||Jan 16|
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January 18, 2019
Seasonally-adjusted consumer prices increased 0.2% from a month earlier in December, contrasting November’s 0.1% fall (previously reported: -0.2% month-on-month).
January 14, 2019
House prices edged down 0.3% on a seasonally-adjusted monthly basis in December, according to the Teranet-National Bank National Composite House Price Index (November: -0.3% month-on-month s.a.).
January 9, 2019
Housing starts on a seasonally-adjusted annualized (SAAR) basis abated to 213,419 units in December, according to the Canada Mortgage and Housing Corporation (CMHC).
January 9, 2019
On 9 January, the Bank of Canada (BoC) left its target for the overnight rate unchanged at 1.75%, as widely expected by market analysts. The decision to hold was reinforced by the recent fall in oil prices, the prospect of a global economic slowdown and uncertainty over global trade policy.
January 7, 2019
The Ivey Purchasing Managers’ Index (PMI), prepared by the Ricard Ivey School of Business, increased to 59.7 in December from 57.2 in November.