“Recent economic developments … have increased the uncertainty about potential outcomes,” the central bank said in its unanimous decision to leave its benchmark interest rate at 1.75 per cent. The Bank of Canada has been in a tightening cycle since last year, when it followed the US Federal Reserve in lifting rates. But despite some slowdown in Canada, the economy has remained in growth mode, partly because of a lift in exports to the US. Analysts had said the central bank could raise rates again this month but the panel was split on the evidence the economy was strong enough for the hikes to continue.
The central bank said the economy appeared to be running close to capacity, a change from its assessment last month that capacity is “significantly” above its long-run average. The Bank of Canada, along with the Fed, has lifted its key overnight lending rate four times since the summer of 2017. By January of this year, the Bank of Canada raised rates by a total of 50 basis points, to 1.75 per cent. This time, Governor Stephen Poloz opted to hold rates in Canada and leave the door open for a hike in July. Poloz said he might raise rates again before the July rate meeting.
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