Canada

Wednesday, May 29, 2019 - 10:00

MNI POLICY:BOC Keeps Rate 1.75%, Stimulus Remains Appropriate


By Greg Quinn

OTTAWA (MNI) - The Bank of Canada left its key interest rate at 1.75% and said this degree of accommodative policy remains appropriate. There was no new clear signal about a potential change in rates in the statement Wednesday, and the decision to hold was expected by investors and economists surveyed by MNI. The BOC said there is increasing evidence the economy shifted into a pickup starting in the second quarter including consumer spending, exports and signs of firming business investment. Trade tensions have risen globally and Canadian companies are seeing increased restrictions on trade with China. Exporters should benefit from the end of metals tariffs with the U.S. and from signs that a replacement for the Nafta trade pact will be ratified. ``The degree of accommodation being provided by the current policy interest rate remains appropriate,'' the BOC's one-page statement said. ``Overall, recent data have reinforced Governing Council's view that the slowdown in late 2018 and early 2019 was temporary, although global trade risks have increased.'' Following are other highlights of the decison: -BOC will remain data dependent and especially will continue monitoring household spending, oil markets, and global trade. -Housing is stabilizing; oil sector is recovering; pickup seen in 2Q of consumer spending and exports. -However, inventories up sharply in Q1, which might dampen production growth.

--MNI Ottawa Bureau; greg.quinn@marketnews.com

[TOPICS: M$C$$$,MACDS$]

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