The Bank of Canada held interest rates steady
and raised its second-quarter growth forecast as expected while highlighting
the risks that trade wars posed to the global economy
The central bank which has sat on the sidelines
since last October amid an economic slowdown – maintained its key overnight
rate at 1.75% and made no mention of future rate moves
The bank raised its second quarter growth
annualized growth forecast to 2.3% from 1.3%, in part, due to temporary factors
such as the reversal of weather-related softness and a surge in oil-exports
The bank cut its forecasts for 2019 and 2020
global growth to take into account the damage being done by trade tensions, in
particular the tariff war between China and the United States
“Escalation of trade conflicts remains the
biggest downside risk to the global and Canadian outlooks,” BoC said,
adding that the trade wars were curbing manufacturing activity and business
investment while pushing commodity prices down
National housing market stabilizing with
significant adjustments still taking place in some regions; decline in
longer-term mortgage rates is supporting housing activity
Overall inflation rate will likely dip this year
because of the dynamics of gasoline prices and other temporary factors,
expected to drop to 1.6% in Q3 before rising to 2.0% in Q4
