Canadian economy shows strength while the global backdrop weakened
Sept. 6, 2019
Global Korean Post
The Bank of Canada on Sept. 4 announced to maintain its target for the overnight rate at 1 ¾ percent. The Bank Rate is correspondingly 2 percent and the deposit rate is 1 ½ percent.
As the US-China trade conflict has escalated, world trade has contracted and business investment has weakened. This is weighing more heavily on global economic momentum than the Bank had projected in its July Monetary Policy Report (MPR).
Next day, Deputy Governor Lawrence Schembri spoke the key points Governing Council at the Halifax Regional Chamber of Commerce, where he explained that the economy continued to show strength while the global backdrop weakened.
Growth that’s faster than potential can spark unwanted inflation pressures, and growth that’s slower can pull inflation below our 2 percent target.
This link between inflation and economic growth is at the core of the Bank of Canada’s approach to conducting monetary policy to achieve our objective of low and stable inflation.
Bank of Canada concluded that Canada’s economy is operating close to potential and inflation is on target. However, escalating trade conflicts and related uncertainty are taking a toll on the global and Canadian economies.
The next scheduled date for announcing the overnight rate target is October 30, 2019. The next full update of the Bank’s outlook for the economy and inflation, including risks to the projection, will be published in the MPR at the same time.