Thursday , December 9 2021

Stephen Papers Bank of Canada rate is & # 39; main interest & # 39; 1.75 percent


The central bank of Canada ceased to raise interest rates on December 5. The break can & # 39; lasts longer than many had expected, mainly because policy makers are concerned that the contribution of the energy industry for economic growth will be "materially weaker" than expected just a few & # 39; months ago.

The acute weakness in the Canadian oil prices has not rejected the central bank abroad. The Bank of Canada said in a recent statement & # 39; his policy still think that borrowing costs will rise to "neutral range" if you want to stay & # 39; before inflation. Policy makers estimate that the neutral rate at which monetary policy neither help nor hindrance economic growth is between 2.5 percent and 3.5 percent. The target & # 39; current reference is & # 39; 1.75 percent, so there is a way to go.

But recent developments suggest a weak economy will restrain inflation, alleviating the need for the center add additional wind. The negatives outweigh the positives in the new statement of the Bank of Canada, change from October, when the Governor Stephen Pulses and his deputies in the Governing Council increased the interest rates of the quarter.

The news has since been mostly negative. Those policymakers observed that the indicators suggest that the Canadian economy had "less momentum in the fourth & # 39; quarter", the commercial promises of the President of the United States Donald Trump are "to are increasing much more on global demand "and that oil prices have fallen sharply. that new estimates of gross domestic product show that the economy is smaller than previously thought. That means they can & # 39; there is less pressure to increase interest rates.

"The historical revisions & # 39; below Statistics Canada to GDP, along with & # 39; recent macroeconomic developments, indicating that can & # 39; there is additional space for non-inflationary growth," said makers adding that politics will make a final determination when they upgrade their economic outlook in & # 39; January.

The final evaluation of the current situation by the central banks of Canada was not completely dreary. They expressed confidence that the non & # 39; energy investment "will strengthen" in coming months. Despite the oil, the data suggest that industrial companies are struggling to cope with & # 39; new orders will increase capital if they want to grow. The signing of new trade agreements & # 39; American & # 39; On it more certain future, and the promise of the Trudeau government to reduce taxes on investment and reduce the regulation should make Canada more competitive, said the central bank.

Still, the Bank of Canada is more prudent than it was a few weeks ago. He concluded his statement by saying that the pace of increases in the interest rate will be determined by "a number of & # 39; factors", including the effect of & # 39; costs & # 39; higher spending on loans, trade wars, "persistence" evaluation of the central bank's economic capacity.

That list is longer than last time.

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