Close X
Friday, November 29, 2024
ADVT 
National

Bank Of Canada Keeps Benchmark Rate At 0.5% With Economy Unfolding As Expected

Darpan News Desk The Canadian Press, 02 Dec, 2015 01:52 PM
    OTTAWA — The Bank of Canada left its trend-setting interest rate unchanged Wednesday, saying the economy is adjusting as expected to the bite of low commodity prices and weaker-than-anticipated U.S. demand. 
     
    The central bank also said Canadian inflation remains within its target range — the key determinant in its policy decisions.
     
    As a result, its benchmark rate remains at 0.5 per cent.
     
    The Canadian economy, the bank said, has grown largely in line with its October projections, as it continues to undergo to "a complex and lengthy adjustment" to the drop in its terms of trade.
     
    The bank reiterated that it expects growth to moderate in the final three months of 2015 before picking up steam in early 2016.
     
    The economy has received help from the lower Canadian dollar, the ongoing U.S. recovery and the Bank of Canada's moves to cut rates twice this year, the bank said.
     
    "The U.S. economy continues to grow at a solid pace, although private domestic demand has proven slightly less robust than expected," the Bank of Canada said in a statement.
     
    "Meanwhile, commodity prices have declined further. The ongoing terms-of-trade adjustments and shifting growth prospects across different regions are contributing to exchange-rate movements."
     
    The bank also highlighted economic challenges such as lower business investment in resource sectors and vulnerabilities in the housing sector, which continue to creep higher during the prolonged era of rock-bottom interest rates.
     
    The labour market, it added, has held up well even though commodity-producing regions have suffered significant jobs losses.
     
    "In the midst of all these adjustments, inflation is in line with the bank's October outlook," the bank said.
     
     
    "The bank judges that the risks around the inflation profile remain roughly balanced over the projection horizon."
     
    The decision came a day after fresh Statistics Canada data revealed that the country emerged from the technical recession that knocked the economy into reverse over the first half of 2015.
     
    But the readings for real gross domestic product — a common measure of economic growth — also found that the turnaround quickly showed signs of lost momentum.
     
    This week's data released by the federal statistical agency showed that real GDP grew at an annualized rate of 2.3 per cent during the three-month period that ended in September.
     
    It also said the economy contracted by 0.5 per cent at a non-annualized rate in September — a drop mostly tied to Canada's struggling manufacturing and natural resources industries.
     
    The reading suggests real GDP for the fourth quarter could come in weaker than expected. The Bank of Canada is predicting 1.5 per cent growth for that quarter. 
     
    Analysts said below-zero growth in the fourth quarter would likely force the Bank of Canada to consider lowering its rate in the new year.
     
    The Bank of Canada is scheduled to make its next rate announcement in January.

    MORE National ARTICLES

    Justin Trudeau To Discuss Climate Change In Meeting With Indian PM Narendra Modi

    Justin Trudeau To Discuss Climate Change In Meeting With Indian PM Narendra Modi
    India's Modi took a pass on Malta and his country is seen as a significant impediment to a global climate change pact, given India's refusal to rein in its galloping greenhouse gas emissions.

    Justin Trudeau To Discuss Climate Change In Meeting With Indian PM Narendra Modi

    Maine Ski Resort Works Focuses On Safety After 2nd Lift Accident In 5 Years

    Maine Ski Resort Works Focuses On Safety After 2nd Lift Accident In 5 Years
    Sugarloaf is spending $1.5 million to make improvements after a chairlift malfunction allowed it to move in reverse last March, injuring seven skiers.

    Maine Ski Resort Works Focuses On Safety After 2nd Lift Accident In 5 Years

    Prime Minister Justin Trudeau Pledges $15Million To Train Youth In Eight African Countries

    Prime Minister Justin Trudeau Pledges $15Million To Train Youth In Eight African Countries
    VALLETTA, Malta — The Canadian government will contribute more than $15 million to help train youth in eight African countries find good jobs.

    Prime Minister Justin Trudeau Pledges $15Million To Train Youth In Eight African Countries

    Racial Attack On Indian Family In Northern Ireland, £5,000 Raised By Strangers For Help

    Racial Attack On Indian Family In Northern Ireland, £5,000 Raised By Strangers For Help
    An Indian family faced racial attack in Northern Ireland as their car was torched in the premises of their house

    Racial Attack On Indian Family In Northern Ireland, £5,000 Raised By Strangers For Help

    Ferrari's Hometown Struggles With Constant Howl Of Race Cars Tested By Tourists

    Ferrari's Hometown Struggles With Constant Howl Of Race Cars Tested By Tourists
    "They are obviously big cylinder cars that are very powerful, and they are circulating on the same streets with regular traffic," says Maranello Mayor Massimiliano Morini.

    Ferrari's Hometown Struggles With Constant Howl Of Race Cars Tested By Tourists

    Obama Shops 'Small Business Saturday' At Washington Bookstore, Popular Popsicle Shop

    Obama Shops 'Small Business Saturday' At Washington Bookstore, Popular Popsicle Shop
    Obama and daughters Malia and Sasha visited Upshur Street Books in Washington's Petworth neighbourhood Saturday.

    Obama Shops 'Small Business Saturday' At Washington Bookstore, Popular Popsicle Shop