Close X
Friday, January 24, 2025
ADVT 
National

Bank Of Canada Holds Key Rate At 0.75% Despite Questions About U.S. Weakness

Darpan News Desk The Canadian Press, 27 May, 2015 10:49 AM
  • Bank Of Canada Holds Key Rate At 0.75% Despite Questions About U.S. Weakness
OTTAWA — The Bank of Canada is keeping its trendsetting interest rate locked at 0.75 per cent even as recent weakness in the United States raises questions about the economy here at home.
 
The central bank said Wednesday that it's standing pat because inflation has been in line with projections and consumption has held up relatively well — even amid the net negative effects of lower oil prices.
 
The bank, however, plans to keep an eye on the potential economic implications for Canada if the loonie stays higher than it has been in recent months — a result of lower U.S. dollar and slightly higher oil prices.
 
"If these developments are sustained, their net effect will need to be assessed as more data become available in the months ahead," the bank said in delivering its latest rate announcement.
 
The central bank also said while risks to the country's financial stability remain elevated, they seem to be unfolding as anticipated.
 
When it came to inflation, the bank's outlook didn't budge.
 
It said inflation, which had a reading of 0.8 per cent for April, remained at the lower end of the bank's target range because of the temporary impact of lower energy prices.
 
The bank said temporary factors are also affecting core inflation, which excludes some volatile items such as gasoline. It said core inflation was higher than usual because of the effect of the past depreciation in the Canadian dollar.
 
"Although a number of complex adjustments are underway, the bank's assessment of risks to the inflation profile has not materially changed," the central bank said.
 
National Bank senior economist Krishen Rangasamy said the bank's statement reiterates its optimism for the country's economic recovery.
 
"The Bank of Canada is trying to send out a positive message," he said.
 
It also seeks to reassure people that the bank will stay put on the rate for the a little while, said Rangasamy. He believes that should help build confidence with those who still believe the central bank could shake up markets again by suddenly moving the benchmark rate.
 
The Bank of Canada surprised markets in January by dropping the rate from a full percentage point as insurance against the "unambiguously negative" impact of sliding oil prices.
 
Last week, Bank of Canada governor Stephen Poloz called the weaker-than-expected U.S. economy "slightly puzzling," but he expressed optimism it would start accelerating in the second half of 2015. 
 
While Poloz has been counting on a strengthening American economy to provide a major boost for Canada — so far this year the U.S. has stopped short of expectations.
 
On Wednesday, the bank predicted a return to "solid growth" in the second quarter, even though Poloz has warned that data for the first three months of 2015 will look "atrocious" and he has projected zero growth for that period.
 
The bank's next rate announcement is scheduled for July 15, when it will also release its quarterly monetary policy report.

MORE National ARTICLES

Kamloops Man Found Fit To Stand Trial Over Murder Of Ex-Girlfriend

Kamloops Man Found Fit To Stand Trial Over Murder Of Ex-Girlfriend
KAMLOOPS, B.C. — A man accused of killing his estranged girlfriend last December in Kamloops, B.C., has been found mentally fit to stand trial.

Kamloops Man Found Fit To Stand Trial Over Murder Of Ex-Girlfriend

Obama Writes About PM Modi In Time Magazine, Calls Him 'India's Reformer-in-chief'

Obama Writes About PM Modi In Time Magazine, Calls Him 'India's Reformer-in-chief'
Headed by Prime Minister Narendra Modi, whom President Barack Obama calls "India's reformer-in-chief", four people of Indian origin figure in the Time magazine's list of the World's 100 most influential people this year.

Obama Writes About PM Modi In Time Magazine, Calls Him 'India's Reformer-in-chief'

PM Modi Pitches For Canadian Investment, Connects With Diaspora

PM Modi Pitches For Canadian Investment, Connects With Diaspora
Prime Minister Narendra Modi on Thursday pitched for investments for India as he met Canadian bankers and pension fund managers, winding up his three-nation tour before flying back home on Friday.

PM Modi Pitches For Canadian Investment, Connects With Diaspora

Home Ice Advantage Doesn't Help Vancouver Canucks As They Fall To Calgary Flames In Game 1

Home Ice Advantage Doesn't Help Vancouver Canucks As They Fall To Calgary Flames In Game 1
Kris Russell's goal with 30 seconds left to play on Wednesday gave the Calgary Flames a 2-1 victory and a 1-0 lead in the opening-round series.

Home Ice Advantage Doesn't Help Vancouver Canucks As They Fall To Calgary Flames In Game 1

Modi Leaves For Vancouver

Modi Leaves For Vancouver
Prime Minister Narendra Modi on Thursday left for Vancouver, the third and final stop of his Canadian tour.

Modi Leaves For Vancouver

Ontario Will Hike Beer Tax, Sell Majority Of Hydro One To Fund Infrastructure

Ontario Will Hike Beer Tax, Sell Majority Of Hydro One To Fund Infrastructure
TORONTO — Ontario's "biggest shakeup" to beer sales since it repealed prohibition in 1927 includes a new tax on the beverage and allowing it to be sold in hundreds of grocery stores, Premier Kathleen Wynne said Thursday.

Ontario Will Hike Beer Tax, Sell Majority Of Hydro One To Fund Infrastructure