Canadian Manufacturing

Bank of Canada holds rate, but sends fresh signals that hikes are on the horizon

The central bank has bumped up its trend-setting rate twice this year and is again cautiously hinting that more increases are on the way

December 6, 2017  by The Canadian Press

OTTAWA—The Bank of Canada is sticking with its trend-setting interest rate—but it’s sending out fresh, yet cautious, warnings that increases are likely on the way.

The central bank has now left its rate locked at one per cent for two straight policy announcements after the strengthening economy prompted it to raise it twice in the summer.

The bank is pointing to several positives that could support another increase in the coming months, such as encouraging job and wage growth, sturdy business investment and the resilience of consumer spending despite heavy debt loads and higher borrowing costs.

It also says the economic benefits from government infrastructure investments are becoming increasingly evident in the economic data.


But on the other hand, the bank says exports have slipped more than expected in recent months after a powerful start to the year and it notes that the international outlook faces considerable uncertainty mostly due to geopolitical- and trade-related factors.

Moving forward, the bank says it will remain cautious and that it will be influenced by incoming economic data such as wage growth, employment, the evolution of Canada’s economic capacity and how the economy reacts to higher interest rates.

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