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The Bank of Canada kept its key interest rate at 2.25 percent. The move was widely expected after encouraging third-quarter data showed the Canadian economy had weathered some of the turmoil caused by the trade war.
Central bank Governor Tiff Macklem wrote in his opening remarks that the current rate is “about the right level” to give the economy a boost while also keeping inflation close to its two percent target.
Canada's economy was stronger than expected in the third quarter, with GDP and jobs growth exceeding expectations and the unemployment rate falling to 6.5 percent in November.
But the bank noted that consumer spending and business investment remained almost at the same level. That's likely to change in the fourth quarter, but the bank expects economic growth could slow.
Inflation is hovering just above two percent, and the Bank of Canada basic measures Inflation (which excludes volatile components such as changes in gas or taxes) is approaching 3 percent.
While the steel, aluminum, auto and forestry sectors have been hit by U.S. tariffs that are putting pressure on business investment more broadly, “the overall economy is proving resilient,” Macklem said. in his written comments.
However, “uncertainty remains high,” the central bank wrote in its press release. “If the forecast changes, we are ready to respond.”
Macklem is expected to discuss the decision at 10:30 a.m. ET with Senior Deputy Governor Carolyn Rogers. This press conference will be broadcast live here.
