Investing.com – The Bank of Canada (BoC) decided on Wednesday to keep its benchmark interest rate unchanged.
As expected, the BoC said it was holding its overnight cash rate steady at 1.25%.
The Canadian monetary authority also noted that the bank rate is correspondingly 1.25% and the deposit rate is 1%.
The BoC noted that global growth remained solid and wide-spread with new government spending and previously announced tax cuts anticipating a boost in growth for this year and next.
“However, trade policy developments are an important and growing source of uncertainty for the global and Canadian outlooks”, the central bank said in its statement.
Furthermore, the BoC noted that it was continuing to monitor the Canadian economy’s sensitivity to higher interest rates.
“Notably, household credit growth has decelerated for three consecutive months,” it said.
The BoC will be providing updated economic projections at its meeting in April.
With regard to inflation, the central bank said that it was “running close” to its 2% target and that core readings had edged up.
It added that wage growth had firmed, though it remained lower than in a typical economy with no labor slack.
“While the economic outlook is expected to warrant higher interest rates over time, some continued monetary policy accommodation will likely be needed to keep the economy operating close to potential and inflation on target,” the BoC highlighted.
“Governing Council will remain cautious in considering future policy adjustments, 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,” it concluded.