elenathewise / Depositphotos.com
The Bank of Canada has kept its key interest rate at 2.25 per cent, marking its sixth straight decision to leave rates unchanged.
Governor Tiff Macklem said Canada’s economy is showing signs of improvement after a slow start to the year, with stronger consumer spending, a stabilizing housing market and growing exports helping support the recovery. He said the current rate remains appropriate to bring inflation back to the Bank’s two per cent target while supporting economic growth.
However, Macklem warned that ongoing instability in the Middle East continues to create uncertainty. Rising oil prices have pushed up gasoline costs, and the Bank says prolonged increases could eventually raise food prices and other consumer costs.
While further rate hikes remain possible if inflation becomes more persistent, Macklem said that is not the Bank’s expected path.
Most economists also expect the Bank of Canada to leave rates unchanged at its next announcement in September, citing softer economic growth and easing inflation pressures outside the energy sector.
