MNI DATA IMPACT: Text of BOC Decision to Keep Rate at 1.75%>

By Greg Quinn

     OTTAWA (MNI) - Here is the text of the BOC decision: 

     The Bank of Canada today maintained its target for the overnight 

rate at 1.75 percent. The Bank Rate is correspondingly 2 percent and the 

deposit rate is 1.5 percent. 

     The Bank's October projection for global economic growth appears to 

be intact. There is nascent evidence that the global economy is 

stabilizing, with growth still expected to edge higher over the next 

couple of years. Financial markets have been supported by central bank 

actions and waning recession concerns, while being buffeted by news on 

the trade front. Indeed, ongoing trade conflicts and related uncertainty 

are still weighing on global economic activity, and remain the biggest 

source of risk to the outlook. In this context, commodity prices and the 

Canadian dollar have remained relatively stable. 

     Growth in Canada slowed in the third quarter of 2019 to 1.3 

percent, as expected. Consumer spending expanded moderately, underpinned 

by stronger wage growth. Housing investment was also a source of 

strength, supported by population growth and low mortgage rates. The 

Bank continues to monitor the evolution of financial vulnerabilities 

related to the household sector. As expected, exports contracted, driven 

by non-energy commodities. However, investment spending unexpectedly 

showed strong growth, notably in transportation equipment and 

engineering projects. The Bank will be assessing the extent to which 

this points to renewed momentum in investment. 

     CPI inflation in Canada remains at target, and measures of core 

inflation are around 2 percent, consistent with an economy operating 

near capacity. Inflation will increase temporarily in the coming months 

due to year-over-year movements in gasoline prices. The Bank continues 

to expect inflation to track close to the 2 percent target over the next 

two years. 

     Based on developments since October, Governing Council judges it 

appropriate to maintain the current level of the overnight rate target. 

Future interest rate decisions will be guided by the Bank's continuing 

assessment of the adverse impact of trade conflicts against the sources 

of resilience in the Canadian economy - notably consumer spending and 

housing activity. Fiscal policy developments will also figure into the 

Bank's updated outlook in January. 

     Information note: The next scheduled date for announcing the 

overnight rate target is January 22, 2020. The next full update of the 

Bank's outlook for the economy and inflation, including risks to the 

projection, will be published in the MPR at the same time. 

--MNI Ottawa Bureau, +1-613-314-9647, greg.quinn@marketnews.com

[TOPICS: M$C$$$,MACDS$]