Bank of Canada maintains overnight rate - One full year of unchanged rates.

On Wednesday, the Bank of Canada announced it is maintaining the key interest rate at 1.75.  This marks one full year of unchanged rates for Canada’s central bank.

There had been speculation that the Bank of Canada would follow in the footsteps of the U.S. central bank, which has cut its rate twice this year and is announcing another interest rate decision later today in which the markets expect yet another .25% cut. However, several key economic indicators have supported the Bank of Canada's decision to hold its key interest rate steady.

The Canadian economy is still operating close to its full potential, particularly outside the energy sector, and that the small output gap that remains will inch closed over the next two years. The labour market also remains strong and wage growth is picking up, and consumer spending and housing have shown solid strength.

“Governing Council is mindful that the resilience of Canada’s economy will be increasingly tested as trade conflicts and uncertainty persist,” the bank said in its statement released this morning.

"In considering the appropriate path for monetary policy, the Bank will be monitoring the extent to which the global slowdown spreads beyond manufacturing and investment. In this context, it will pay close attention to the sources of resilience in the Canadian economy – notably consumer spending and housing activity”.

The next announcement will be held on December 4, 2019. We should see interest rates remain at current levels during this minority government. If there are any potential rate drops, we will need to monitor the employment levels and programs that could potentially be put in place - however, I suspect it will be more of a status quo in the near term with interest rates.