Canada’s central bank has decided to keep its benchmark interest rate at 1.75 per cent, and says the timing of possible future hikes has become increasingly uncertain.
The Bank of Canada says the economic slowdown that began at the end of last year is a bit worse than it was expecting, including a sharper-than-anticipated slowdown in Canada’s oil patch.
“It is clear that global economic prospects would be buoyed by the resolution of trade conflicts,” the bank said.
The bank meets eight times a year to set its interest rate, which filters down into the rates that Canadians get on things like savings accounts and mortgages.
James Laird, co-founder of rate comparison website Ratehub Inc. and president of mortgage broker CanWise Financial, said that reading between the lines of the bank’s decision on Wednesday suggests their concern over the economy could temporarily override their desire to see higher interest rates.
“The softening rate outlook will put downward pressure on bond yields, causing fixed rates to drop as we enter the spring homebuying market,” Laird said.
“Overall, this announcement will be helpful to first-time homebuyers looking to enter the housing market this spring.”
Bank of Canada governor Stephen Poloz is next scheduled to meet with other members of the bank’s governing council and reveal their decision on where to set the bank’s interest rate on April 24, 2019.
The consensus among economists polled by Bloomberg is that the bank will stand pat again at that meeting, but trading in investments known as overnight index swaps suggests there’s about an eight per cent chance of a rate cut next month.
If it happens, it would be the first rate cut since 2015.