The Bank of Canada did what was expected of it on Wednesday, opting not to change its benchmark interest rate from its current level of 1.25 per cent.
But in a statement, it seemed to hint at concern over growing trade protectionism in justifying the decision to not raise rates again this time around.
“Trade policy developments are an important and growing source of uncertainty for the global and Canadian outlooks,” the bank said in an apparent reference to U.S. President Donald Trump’s controversial willingness to raise tariffs to protect U.S. industries.
The bank also noted disappointing Canadian GDP numbers, which have showed the Canadian economy expanded at an annual pace of just 1.6 per cent in the last half of 2017 — less than half the pace seen in the first half.
“The data releases are on the bank’s mind, including the weak merchandise trade data for January which is added to the list,” said Arlene Kish, an economist with IHS Markit.
And the bank mentioned a slowdown in the housing market. In January, new rules aimed at tightening the mortgage market came into force. That seems to have pushed people to buy in late 2017, before the rules came in, because more recent sales figures for January and February were down sharply from levels seen last year.
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