Bank of Canada holds key interest rate at 1.75%
The Bank of Canada is confused. And when it’s confused, it stops what it’s doing until it figures things out.
Similarly, they assumed Canada’s economy would stumble, but the fall in the fourth quarter was “sharper and more broadly based” than they predicted, the statement said. The recalibration was made necessary by Statistics Canada’s latest tally of gross domestic product, which shows the economy nearly stalled in the fourth quarter.
Policy makers said the gap between actual economic output and its estimate of what the economy can produce without stoking inflation is wider, although they won’t have a new estimate until April. “Given the mixed picture that the data present, it will take time to gauge the persistence of below-potential growth and the implications for the inflation outlook.”
In the United States, the Federal Reserve has made sure that everyone knows that it is no longer inclined to raise interest rates, even though the economy grew at an annual rate of almost three per cent in the fourth quarter.
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