Bank of Canada Holds the Line on Interest Rates

The Bank of Canada today kept its target interest rate at 1.25% today. Analysts say this is due to a combination of international trade uncertainty and slowing growth in jobs and the economy. The international trade front is clouded by the Trump administration's recent announcement of higher tariffs on US imports of steel (25%) - about 90% of our total steel exports are destined for the US - and aluminium (10%) plus the generally gloomy feeling after the most recent round of NAFTA negotiations. Although the economy grew at a projected rate of 3.0% in 2017, Q4 growth was slower than the Bank expected. Recent softening in the dollar exchange rate (today, it's trading at below US$0.77, down from the US$0.78-$0.80 we've seen lately) may also have contributed, as has the fact that inflation is running close to the bank's target of 2%. The Bank maintained its position that interest rates will continue to rise long-term, but was more cautious about short-term increases than it was in February. You can read the Bank's announcement here.