Bank Of Canada Holds Key Interest Rate At 0.5%

The bank of Canada has kept its interest rate same at 0.5% on Wednesday and decreased the growth outlook for the economy because of the slowdown in housing and a fragile outlook for exports. The central bank has reduced its outlook of growth to around 1.1% this year that was forecasted at 1.3% in July. The Bank has been keeping the same interest rate since July 2015 because of the economic slack. Reporters in Ottawa have stated that according to the governor of the Bank of Canada, Stephen Poloz is going to bring the federally mandated mortgate measures so as to stable the housing in Canada and it is going to overcome the financial vulnerabilities. The news is available everywhere in the Canada newspapers.

Governor, Poloz further said that they are expected to decrease the resales of housing in the coming time and it might lead to move to the development of smaller homes that would be used for saving money spent in the economy. It has been found that new mortage rules will be knocking around 0.3% out of the economic growth after the two years. Export of goods in Canada got profit in July and August but the profit was not enough to meet with the economic slack. Weak spending in U.S. business and less expectations with the housing market that is considered as the top trading partner of Canada is responsible for the degradation of the growth outlook of the bank for the next two years.

Bank Of Canada Holds Key Interest Rate At 0.5%

It has been told by Poloz that a survey was done in which it has been found that there are some factors responsible for the hindering of exports like uncertainty, high electrical costs, lack of infrastructure, trade barriers, etc. It has been stated by the bank that the economy is going to grow around 2% in the year 2017 as well as in 2018. To know more about this news, look into the world newspapers that contains all latest news and information.

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No Hike Seen in the Bank of Canada

Many economists have said that the current economic outlook has brought the bank in an aggressive condition in the term of interest rates. Douglas Porter, BMO chief economist has said that the bank of Canada rarely hikes the interest rates and will continue to keep the interest rate same till the year 2018. It has been told by the governor that they discussed about adding monetary stimulus to the economy, but they decided to not to add because of the following reasons:

  1. Adverse effects of new mortage rules.
  2. Export outlooks.
  • Effect of the federal fiscal measures.
  1. Impact on the confidence of business of Nov. 8 U.S. Election.

For more updates regarding this economic news, stay connected with the Canada newspapers.

Post Author: Pooja S

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