Free Trial

Fixed Rate Purchase Offer


Citi Look For Further Capital Inflows


AOFM Weekly Issuance Slate


Little Reaction To RBA SoMP

Real-time Actionable Insight

Get the latest on Central Bank Policy and FX & FI Markets to help inform both your strategic and tactical decision-making.

Free Access

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

By Greg Quinn
     OTTAWA (MNI) - Text of the BOC decision released Wednesday from 
     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 1.50 percent. 
     The global economy is showing signs of stabilization, and some 
recent trade developments have been positive. However, there remains a 
high degree of uncertainty and geopolitical tensions have re-emerged, 
with tragic consequences. The Canadian economy has been resilient but 
indicators since the October Monetary Policy Report (MPR) have been 
     Data for Canada indicate that growth in the near term will be 
weaker, and the output gap wider, than the Bank projected in October. 
The Bank now estimates growth of 0.3 percent in the fourth quarter of 
2019 and 1.3 percent in the first quarter of 2020. Exports fell in late 
2019, and business investment appears to have weakened after a strong 
third quarter. Job creation has slowed and indicators of consumer 
confidence and spending have been unexpectedly soft. In contrast, 
residential investment was robust through most of 2019, moderating to a 
still-solid pace in the fourth quarter. 
     Some of the slowdown in growth in late 2019 was related to special 
factors that include strikes, poor weather, and inventory adjustments. 
The weaker data could also signal that global economic conditions have 
been affecting Canada's economy to a greater extent than was predicted. 
Moreover, during the past year Canadians have been saving a larger share 
of their incomes, which could signal increased consumer caution. This 
could dampen consumer spending but help to alleviate financial 
vulnerabilities at the same time. 
     Looking ahead, Canadian business investment and exports are 
expected to contribute modestly to growth, supported by stronger global 
activity and demand. The Bank is also projecting a pickup in household 
spending, supported by population and income growth, as well as by the 
recent federal income tax cut. In its January MPR, the Bank projects the 
global economy will grow by just over 3 percent in 2020 and 3-1/4 
percent in 2021. For Canada, the Bank now forecasts real GDP will grow 
by 1.6 percent this year and 2 percent in 2021, following 1.6 percent 
growth in 2019. 
     While the output gap has widened in recent months, measures of 
inflation remain around 2 percent. This is consistent with an economy 
that, until recently, has been operating close to capacity. The Bank 
expects inflation will stay around the 2 percent target over the 
projection horizon, with some fluctuations in 2020 from volatility in 
energy prices. Meanwhile, labour markets in most regions have little 
slack and wages continue to firm. 
     In determining the future path for the Bank's policy interest rate, 
Governing Council will be watching closely to see if the recent slowdown 
in growth is more persistent than forecast. In assessing incoming data, 
the Bank will be paying particular attention to developments in consumer 
spending, the housing market, and business investment. 
     Information note: The next scheduled date for announcing the 
overnight rate target is March 4, 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 on April 15, 2020. 
--MNI Ottawa Bureau, +1-613-314-9647,

To read the full story

Why Subscribe to

MNI is the leading provider

of news and intelligence specifically for the Global Foreign Exchange and Fixed Income Markets, providing timely, relevant, and critical insight for market professionals and those who want to make informed investment decisions. We offer not simply news, but news analysis, linking breaking news to the effects on capital markets. Our exclusive information and intelligence moves markets.

Our credibility

for delivering mission-critical information has been built over three decades. The quality and experience of MNI's team of analysts and reporters across America, Asia and Europe truly sets us apart. Our Markets team includes former fixed-income specialists, currency traders, economists and strategists, who are able to combine expertise on macro economics, financial markets, and political risk to give a comprehensive and holistic insight on global markets.