THE BANK of Canada (BoC) kept interest rates at 0.5 per cent yesterday, in line with analysts’ expectations.
The BoC has cut rates twice recently, as the country grapples with a collapse in oil and commodity prices.
The Canadian economy entered a technical recession in the first half the year – six straight months of economic contraction – yet it remains in fairly good shape, with unemployment at seven per cent, well below 2009 levels.
Wages are also still rising in real terms.
The BoC was optimistic on growth going forward, expecting some help from its neighbour.
“Economic activity continues to be underpinned by solid household spending and a firm recovery in the United States, with particular strength in the sectors of the US economy that are important for Canadian exports,” it said in a statement.
The bank also signalled it would not be in any rush to begin lifting rates as it waits to see how its adjustment to cheap oil pans out.
“Canada’s resource sector continues to adjust to lower prices for oil and other commodities, with some spillover to the rest of the economy. These adjustments are complex and are expected to take considerable time,” it said.