Amid Rising Trade Fears, Bank Of Canada Keeps Interest Rate Steady

Benchmark interest rate stays at 1.25%

Citing concerns about trade, the Bank of Canada has kept interest rates at 1.25%.

In a press release accompanying the interest rate announcement, the bank said “trade policy developments are an important and growing source of uncertainty for the global and Canadian outlooks.”

This comes as NAFTA remains up in the air, and Canada faces potential US tariffs on steel and aluminum – tariffs which US President Donald Trump claims are tied to NAFTA negotiations.

In another key part of the Bank of Canada release, they noted that inflation is increasing, while wage growth is lower than expected:

“Inflation is running close to the 2 per cent target and the Bank’s core measures of inflation have edged up, consistent with an economy operating near capacity. Wage growth has firmed, but remains lower than would be typical in an economy with no labour market slack. Inflation is fluctuating because of temporary factors related to gasoline, electricity, and minimum wages.”

This fits with something many people have been saying for some time, which is that even when the government talks about how much the economy is supposedly ‘growing’, nobody really feels it.

Now, with trade fears mounting and the economy slowing, the economic picture continues to worsen, and optimism is in short supply.

Spencer Fernando

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5 comments Add yours
  1. Keeping the interest rates where they are will NOT help the economy, lowering them will NOT help the economy! Those both cause more stagnation of he economy and encourgae deeper debt, which is already untenable! Canada is in very serious trouble!

  2. Liberal strategy is to lie about the “rosie” economy. Lies minimize the criticism from msm and their base. Truth isn’t in the Liberal vocabulary. Conservatives are not Negative Nellies just able to “handle the truth.”
    Fly the flag upside down because Trudeau and the cabal are attacking us from Parliament Hill.

  3. The economy operating near capacity … man, I’d hate to see it if it slumped!!
    Maybe they should have checked with Alberta first before making such an uninformed, partisan statement …

  4. Spencer: I enjoy reading your columns. However; they are far too short; often just a few lines. Could we have one one article with more depth; rather than a handful of short pieces? (I admire people who write daily articles. Writing isn’t always easy.)

  5. Perhaps it”s because of a different education, but I have been taught there are three kinds of inflation: 1) Regular inflation, from 0.01% to 9.99% per year 2) Mass inflation, from 10% to 49.99% per year 3) Hyper inflation, 50% or more per year Inflation takes many shapes: consumer prices, wage, production costs etc. Just to give an example if home prices in a given area go up 12.5% year on year, I say that area has mass inflation in housing prices. Another example, if the price of a given commodity goes up 8% year on year, that”s just boring plain old inflation in that commodity sector. As we have been drilled for decades to consider consumption to be the ultimate driver for all forms of economic activity, various consumer price indexes are taken to be the final measure of inflation. Not unreasonable. However, due to both brazen manipulation of consumer price indexes (see how food prices are adjusted or omitted) and the shift away from consumption and towards financial asset valuations as the ultimate driver of economic activity (can you eat Tesla stocks? Can you drive around in a GE bond?) these days inflation is only used as a chimaeric indicator of monetary policy success or failure, again an indicator easily manipulated and hence gutted of much of its meaning.

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