Bank of Canada holds key interest rate steady at 0.5%
Headed into the Bank's decision, multiple economists were split as to what the Bank was going to do. The central bank cut its rate twice last year in an attempt to stimulate the economy. Ultimately, it decided to hold the rate steady at 0.5%.
Despite a weak Canadian dollar, when the Bank of Canada didn't cut the key lending rate today, it signaled a vote of confidence in the loonie, which rose back up to 68.89 cents US. Despite the Canadian economy struggling, it is still showing signs for a slow rebound later this year. The expected growth of the economy is 1.5% for 2016 and an additional 2.5% in 2017.
Economists across Canada are still expecting a rate cut from the central bank, sooner rather than later. Some economists predict that we may even see one as early as March or April.
Some suspect that one of the reasons the central bank has decided not to budge on the rate is because they are waiting until further information on the federal budget is released, as Ottawa is expected to flood the economy with infrastructure spending.