Bank of Canada keeps interest rate unchanged at 1.75 percent

The Bank of Canada announced Wednesday to keep its interest rate unchanged at 1.75 percent due to a slowing global and domestic economy.

The central bank has raised its key rate five times since mid-2017 to 1.75 percent, but has been on hold since last October.

In the announcement, the bank said it expects the country's economy will be weaker in the first half of 2019 than it projected in January.

It blames "multiple" factors for its new and much gloomier outlook, including trade tensions and a deeper global slowdown.

"While the sources of moderation appear to be multiple, trade tensions and uncertainty are weighing heavily on confidence and economic activity. It is difficult to disentangle these confidence effects from other adverse factors, but it is clear that global economic prospects would be buoyed by the resolution of trade conflicts," said the bank.

It acknowledges progress in ongoing U.S.-China trade negotiations. But other problems remain unresolved, including Brexit, U.S. ratification of the U.S.-Mexico-Canada Trade Agreement, and U.S. steel and aluminum tariffs.

The bank expects inflation to be slightly below its 2 percent target for 2019 on temporary factors, including lower energy prices and a wider output gap.

Consumer spending and the housing market were soft despite strong growth in employment and labor income, with exports and business investment falling short of expectations, it added.

(ASIA PACIFIC DAILY)