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Bank of Canada Holds Rates Steady, Remains Cautious

- The Bank of Canada held interest rates steady at 1.0% on Wednesday, as expected, saying that while higher interest rates will likely be required over time it will continue to be cautious as it considers future moves.

“While higher interest rates will likely be required over time, Governing Council will continue to be cautious, guided by incoming data in assessing the economy’s sensitivity to interest rates, the evolution of economic capacity, and the dynamics of both wage growth and inflation,” the bank said in a statement.

The central bank said that despite rising employment and participation rates slack still remains in the labor market.

The bank noted buoyant global growth, higher oil prices and eased financial conditions, but warned that the “global outlook remains subject to considerable uncertainty, notably about geopolitical developments and trade policies.”

It also said recent Canadian economic data are in line with its October projections, which “was for growth to moderate while remaining above potential in the second half of 2017.”

The bank raised rates in July and September for the first time in seven years but has since turned more cautious on the outlook for the economy.

The Canadian dollar was lower following the announcement, with USD/CAD at 1.2739 up from around 1.2655 earlier.

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