The Financial Post reports in its Thursday, March 7, edition that the Bank of Canada left its benchmark interest rate unchanged at 1.75 per cent on March 6 and signalled that policy has entered an extended period of stasis. The Post's Kevin Carmichael writes that Governor
Stephen Poloz and his deputies on the Governing Council expected slower global economic growth, but the slowdown has been "more pronounced and widespread" than forecast in January, the BOC said in its latest policy statement. Similarly, they assumed Canada's economy would stumble, but the fall in the fourth quarter was "sharper and more broadly based" than they predicted, the statement said.
After economic growth of 3 per cent in 2017, and 1.8 per cent in 2018, the BOC is bracing for a period of subdued economic activity.
The recalibration was made necessary by Statistics Canada's latest tally of gross domestic product, which shows the economy nearly stalled in the fourth quarter. Years of outsized borrowing appears to have caught up with households, which have cut their spending significantly. The housing market no longer is red hot. Exports and business investment have gone cold, as weak oil prices and the trade wars sap business confidence.
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