OTTAWA — A top Bank of Canada official says doubts raised this week about future interest-rate hikes came after the central bank’s governing council was caught off guard by surprisingly weak economic data.
In prepared remarks of a speech today in Hamilton, deputy governor Lynn Patterson says the Bank of Canada’s policy-makers had been expecting a slowdown in the energy sector in the final three months of 2018.
But Patterson says governing council members had not been anticipating Statistics Canada’s economic report last Friday to show a sudden deceleration in other categories as well.
The Bank of Canada maintained its interest rate at 1.75 per cent Wednesday, as expected — however, it raised considerable doubts about the timing of future increases and warned the first half of 2019 is now on track to post weaker-than-expected results.
She says the decision-makers were confronted by unexpectedly soft numbers in the areas of business investment, exports and household spending.
Patterson says the bank’s policy decision and statement this week also came after governing council factored in the slowing global economy, which has been affected by trade tensions and other uncertainties.
Many analysts don’t expect the central bank to raise the benchmark until at least late 2019 — and some have started to suggest a rate cut could arrive before the next increase.