The Globe and Mail reports in its Thursday edition that as widely expected, the Bank of Canada kept its key rate unchanged at 1.75 per cent on Wednesday after five rate increases since mid-2017.
The Globe's Barrie Mckenna writes that Governor Stephen Poloz pointed to a clutch of negatives now weighing on the economy that could slow the pace of future rate hikes, including the price discount on Canadian crude, uncertainty hanging over business investment and the United States-China trade showdown. The bank also highlighted the possibility that the economy could still grow more rapidly without sparking inflation.
"The persistence of the oil price shock, the evolution of business investments and the bank's assessment of the economy's capacity will also factor into our decisions about the future stance of monetary policy," the BOC said.
The Canadian dollar was down more than half a cent in midday trading following the announcement amid fading expectations that the BOC will hike again in January.
It is not quite a "mea culpa or a 180-degree turn," but Mr. Poloz is definitely trying to "walk back" the rate-hike expectations he planted just six weeks ago, said Gluskin, Sheff + Assoc. economist David Rosenberg.
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