Markets

Bank of Canada maintains overnight rate target at 1/2 per cent

Bank of Canada maintains overnight rate target at 1/2 per cent

The Bank of Canada has chose to keep its benchmark interest rate where it is, citing a possible slowdown of the economy.

The Bank of Canada is holding its benchmark interest rate at 0.5 per cent as economic conditions move along largely in line with its expectations.

December futures on the S&P TSX index SXFc1 were down 0.04 percent at 7:35 a.m. ET.

"Barring some massive shock, the Bank appears to be very comfortable staying on the sidelines for some time yet", Porter said.

Donald Trump's election win in the United States has created expectations in financial markets that Republicans in Washington will inject new fiscal stimulus into a USA economy that is near full capacity, a development the bank says has pushed Canadian bond yields "significantly" higher.

Dawn Desjardins, deputy chief economist with RBC, said her bank assumes the USA economy will grow at a firmer pace in 2017.

"Uncertainty, which has been undermining business confidence and dampening investment in Canada's major trading partners, remains undiminished", policy makers led by Governor Stephen Poloz said in a statement Wednesday from Ottawa.

Death toll in northern India train derailment jumps to 63
Railway officials said almost two dozen ambulances and other vehicles were used to ferry survivors to their homes. Of the roughly 150 injured, 72 were in serious condition, he said .


The US Dollar (USD) plunged sharply against the Canadian Dollar (CAD) on Wednesday, dragging the price of USDCAD to less than 1.3250 following the announcement of monetary policy from the Bank of Canada (BoC).

"In Canada, the dynamics of growth are largely as the Bank anticipated", the statement said.

Canada ships three-quarters of its exports to the U.S., making President-elect Donald Trump's possible mix of fiscal stimulus and trade protectionism a key concern north of border.

Although the Canadian economy contracted 1.6% in the second quarter of 2016 following the Alberta wildfires, the economy has been resilient and rebounded to a 3.5% annualized rate in the third quarter tempering worries that recovery has been thrown off course. "Canadian yields have risen significantly in this context".

The Bank of Canada noted that consumption growth in Canada was strong during the third quarter, which it attributed in part to an expanded tax benefit for families with children.

The effects of the added infrastructure spending haven't yet shown up in the country's gross domestic product data, the central bank said.

It predicted that the recent tightening of financing rules for real estate would help slow the continued rise in Canadian household debt.


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