The country’s central bank is maintaining its trendsetting interest rate at 0.5 per cent, saying the Canadian economy has recovered from a mild recession earlier this year, and doesn’t need a cut in borrowing rates to spur growth.
“Canada’s economy has rebounded,” a statement said. The rate pause was largely expected by economy experts.
As part of its mandate to keep the financial system and economy stable, the Bank of Canada sets its key, overnight lending rate it provides private lenders such as big banks, who in turn use the key rate to determine the interest rates they charge customers.
The Bank of Canada has already lowered the rate twice this year, in January and July, to stimulate the economy and offset some of the impact from a collapse in oil prices that began late last November.
Today’s rate announcement is accompanied by the bank’s assessment of the economy, contained in the quarterly Monetary Policy Report.
Bank of Canada Governor Stephen Poloz will also hold a press conference on the report, his first since Monday’s landslide election victory for the Liberal party under Justin Trudeau — who will replace Stephen Harper as prime minister.
Poloz carefully avoided the politically charged word “recession” in July when the bank said it looked like the economy contracted in the second quarter — a finding later confirmed by Statistics Canada on Sept. 1.
During the federal election campaign that officially began on Aug. 2, Trudeau and the Liberals repeatedly said Canada was in a recession in the first half of 2015 while the Conservatives — including Finance Minister Joe Oliver — insisted the downturn over the first months of 2015 wasn’t severe enough to be considered a true recession.