The Bank of Canada held rates at its latest monetary policy meeting.
The central bank held the target for its overnight rate at 0.50%, as most economists were expecting.
“The Bank of Canada’s decision today to keep interest rates at 0.50% and to stay neutral on the outlook for interest rates shows that, despite strong economic growth and gains in employment, policymakers still aren’t convinced that the economy is on a sustainable growth path,” said David Madani, Senior Canada economist at Capital Economics, in emailed commentary.
In the accompanying statement, the bank noted that, “The global economy continues to gain traction and recent developments reinforce the Bank’s view that growth will gradually strengthen and broaden over the projection horizon.”
“As anticipated, growth in the United States during the first quarter was weak, reflecting mostly temporary factors,” it continued. “Recent data point to a rebound in the second quarter. The uncertainties outlined in the April MPR continue to cloud the global and Canadian outlooks.”
Ahead of the announcement, Deutsche Bank’s Canada economist argued that the bank would likely hold again given that, on balance, not much has changed since the last meeting. Back in April, the central bank also held rates, and noted that although global economic growth had been strengthening, there was still “considerable uncertainty” surrounding the outlook.
The Canadian dollar was up by 0.5% at 1.3449 per US dollar around 10:28 a.m. ET after being little changed ahead of the announcement.