WATCH: Bank of Canada Governor Stephen Poloz has confirmed how much sagging oil prices have hurt the Canadian economy but sayd there is light on the horizon. Mike Drolet has the details.
The Bank of Canada is sticking with its trendsetting interest rate even though the effects of the oil-price shock likely stalled the country’s economy in the first three months of 2015.
The central bank says it’s holding the rate at 0.75 per cent because it expects positives in the non-energy sector to emerge as the economic pain of the oil slump fades in the form of more exports, investment and job opportunities.
WATCH: Bank of Canada chief Stephen Poloz says Canada’s economy is still under performing due to the oil shock, but wants to focus on the positives ahead.
The bank also expects the Canadian economy to receive boosts from growing U.S. demand and easier credit conditions thanks to its January interest-rate cut.
MORE: Plunging oil prices prompt sudden rate cut from Bank of Canada
But the central bank says the country’s economy will first have to ride out the negative effects of the oil slump _ which it says were even more front-loaded than expected.
The bank also released its latest quarterly monetary policy report, which dropped its first-quarter projection for real gross domestic product to zero growth from the 1.5 per cent prediction it made in January.
The Bank of Canada says the continued volatility around crude prices means the “ultimate size” of the impact from the price plunge will have to be watched closely.
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