Bank of Canada holds, says 'economic slack remains'

The Bank of Canada held its key interest rate at 0.50%, as expected, at Wednesday’s policy meeting.

In its statement, the BOC said that “dynamics of growth are largely as the Bank anticipated.”

The decision comes after a December jobs report that showed the country’s unemployment rate dipping to 6.8%, matching its lowest since January 2015. But while people are finding jobs, the quality of those jobs is a bit concerning as they have tended to be of the part-time variety and pay lower wages.

On the labour front, the BOC said, “There have been ongoing gains in employment, but a significant amount of economic slack remains in Canada, in contrast to the United States.”

As for the economy, it grew at a 3.5% clip in the third quarter as the energy market snapped back and households opened up their wallets. That represented a solid bounce back from the contraction of 1.3% that was seen in the second quarter.

Going forward the central bank expects growth to moderate in the fourth quarter.

The Canadian dollar is little changed near 1.3270 per dollar following the announcement.

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