The Globe and Mail reports in its Thursday edition that the Bank of Canada left its key rate unchanged at 1.75 per cent on Wednesday, and made no mention of raising rates, a promise it had made consistently in its statements for the past year. The Globe's Barrie McKenna writes that while the BOC is not openly talking about cutting rates, it seems to have opened the door a crack to the possibility. Governor Stephen Poloz said the economy will grow much more slowly than expected this year. He blamed a barrage of factors, including global trade disputes, slumping investment in the oil and housing sectors, Ontario Premier Doug Ford's relatively austere provincial budget and the harsh winter weather.
All of that prompted it to announce a major downgrade in its forecast for growth in Canada this year -- to 1.2 per cent, from an estimate of 1.7 per cent three months ago. It estimated the economy grew at an annual rate of just 0.3 per cent in the first three months of the year.
If the bank is right, 2019 would be the weakest year for the economy since 2016, when the country was grappling with the fallout of a precipitous slump in the price of oil. Rate hikes may have peaked, at least in the foreseeable future.
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