Bank of Canada stands pat, keeps interest rate at 0.75%

Central bank expects bulk of oil slump's negative effects to strike Canadian economy in the first half of this year.

March 4, 2015   by The Canadian Press

OTTAWA — The Bank of Canada is holding its key interest rate at 0.75% – for at least another month.

In its latest rate announcement, the central bank says the evolution of oil prices as well as the global and Canadian economies are largely unfolding in line with its projections.

The bank also says the bulk of the oil slump’s negative effects will strike the Canadian economy in the first half of this year – and could be more front loaded than it had predicted.

It was the bank’s first rate announcement since January when governor Stephen Poloz caught markets by surprise by lowering the rate a quarter of a percentage point from one per cent.

Last week, analysts had been predicting the bank to cut again, but economic data released in recent days and remarks by Poloz led many to change their forecast to no change in the rate.

In explaining January’s rate reduction, the governor said it was necessary as insurance because the low crude prices would be “unambiguously negative” for the economy.

© 2015 The Canadian Press

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