The Globe and Mail reports in its Thursday edition that the Bank of Canada has put planned higher interest rates on hold in the face of a new, grimmer forecast that shows Canada's economy is slowing down fast. The Globe's Barrie McKenna writes that as it did in December, the BOC left its benchmark rate at 1.75 per cent on Wednesday as the economy slows as a result of lower oil prices, weaker housing activity and the United States-China trade clash.
The BOC insists it is still committed to getting interest rates back up to neutral, but only "over time." The BOC said in a statement,
"The appropriate pace of rate increases will depend on how the outlook evolves, with a particular focus on developments in oil markets, the Canadian housing market, and global trade policy." For homeowners and consumers, this means a reprieve of at least a few months from higher rates on mortgages and car loans. The downside is that the economy is clearly deteriorating, and that will likely mean less business activity and poorer job prospects in 2019.
The bank's new qualified commitment to raise rates "over time" is meant to "inject ambiguity" into what it will do in the months ahead, Governor Stephen Poloz explained to reporters.
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