Amid Rising Trade Fears, Bank Of Canada Keeps Interest Rate Steady

Benchmark interest rate stays at 1.25%

Citing concerns about trade, the Bank of Canada has kept interest rates at 1.25%.

In a press release accompanying the interest rate announcement, the bank said “trade policy developments are an important and growing source of uncertainty for the global and Canadian outlooks.”

This comes as NAFTA remains up in the air, and Canada faces potential US tariffs on steel and aluminum – tariffs which US President Donald Trump claims are tied to NAFTA negotiations.

In another key part of the Bank of Canada release, they noted that inflation is increasing, while wage growth is lower than expected:

“Inflation is running close to the 2 per cent target and the Bank’s core measures of inflation have edged up, consistent with an economy operating near capacity. Wage growth has firmed, but remains lower than would be typical in an economy with no labour market slack. Inflation is fluctuating because of temporary factors related to gasoline, electricity, and minimum wages.”

This fits with something many people have been saying for some time, which is that even when the government talks about how much the economy is supposedly ‘growing’, nobody really feels it.

Now, with trade fears mounting and the economy slowing, the economic picture continues to worsen, and optimism is in short supply.

Spencer Fernando

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