Canada central bank maintains key lending rate at 1.75pc

A sign is pictured outside the Bank of Canada building in Ottawa, Canada, May 23, 2017. Canada’s central bank maintained its key lending rate at 1.75 per cent May 29, 2019. — Reuters pic
A sign is pictured outside the Bank of Canada building in Ottawa, Canada, May 23, 2017. Canada’s central bank maintained its key lending rate at 1.75 per cent May 29, 2019. — Reuters pic

OTTAWA, May 29 — Canada’s central bank today maintained its key lending rate at 1.75 per cent, saying it expects the local economy to pick up after a recent slowdown despite heightened uncertainty over trade with China.

The move was in line with the expectations of economists and the Bank of Canada’s view that the slowdown in late 2018 and early 2019 was temporary.

The bank pointed to strong job growth, consumer spending and exports, as well as signs the oil sector is beginning to recover.

It added that core inflation remains close to 2.0 per cent — in line with its projections —  and is expected to remain so over the coming months.

But “the recent escalation of trade conflicts is heightening uncertainty about economic prospects,” it said in a statement. “In addition, trade restrictions introduced by China are having direct effects on Canadian exports.”

In contrast, the removal this month of US tariffs on Canadian and Mexican steel and aluminum imports as well as the prospect of soon ratifying a new continental trade deal is expected to have “positive implications for Canadian exports and investment,” it added.

The USMCA treaty — which replaces the 25-year-old North American Free Trade Agreement (NAFTA) — could be ratified by the end of July, Canada’s ambassador to Washington David MacNaughhton said this week.

It was signed last year after months of trilateral negotiations, but Canada and Mexico had held up its ratification until the US removed the steel and aluminium tariffs.

Ottawa took a first step yesterday toward approving the USMCA with the passage of a ways and means motion to introduce an act to implement the treaty. — AFP