Money in Canada
Canada - Money
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, Met the why particular 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 - Money Data
|Money (annual variation in %)||7.0||4.9||6.1||8.6||5.8|
5 years of economic forecasts for more than 30 economic indicators.
Canada Money Chart
Source: Bank of Canada.
|Bond Yield||1.89||1.00 %||Feb 20|
|Exchange Rate||1.32||0.15 %||Feb 21|
|Stock Market||16,001||0.23 %||Feb 21|
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February 13, 2019
House prices edged down 0.05% on a seasonally-adjusted monthly basis in January, according to the Teranet-National Bank National Composite House Price Index (December: -0.30% month-on-month).
February 8, 2019
Housing starts on a seasonally-adjusted annualized (SAAR) basis fell to 207,968 units in January, according to the Canada Mortgage and Housing Corporation (CMHC).
February 6, 2019
The Ivey Purchasing Managers’ Index (PMI), prepared by the Richard Ivey School of Business, dipped to 54.7 in January from 59.7 in December.
February 1, 2019
In January, the seasonally-adjusted IHS Markit Manufacturing Purchasing Managers’ Index (PMI) fell to 53.0 from 53.6 a month earlier, an over two-year low.
January 31, 2019
Matching analysts’ expectations, the economy shrank 0.1% month-on-month in November, following a 0.3% month-on-month expansion in October.