trade conflict bank of canada

Trade conflict impacts Bank of Canada interest rate

Tuesday, September 10, 2019

Bank of Canada leaves the key interest rate unchanged at 1.75 per cent. The institution warns the US-China trade conflict is weighing more heavily on the global and Canadian economies than the Bank had projected in its July Monetary Policy Report (MPR).

Since the previous report, the trade conflict has escalated, world trade has contracted and business investment has weakened.

In Canada, housing activity has regained strength more quickly than expected as resales and housing starts catch up to underlying demand, supported by lower mortgage rates. This could add to already-high household debt levels, although mortgage underwriting rules should help to contain the buildup of vulnerabilities.

“In these unusual times, trade policy has a crucial role in monetary policy settings, not only in Canada but globally,” Helmut Pastrick, chief economist, Central 1 says in the credit union’s press release.

“With higher US-China tariff rates scheduled for mid-December, there is more downside ahead to the economy and its prospects.”

The next announcement on the overnight rate target is October 30, 2019.

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