Bank of Canada Holds 1.75% Interest Rate for May 2019

The Bank of Canada overnight interest rate is staying the same for another month.

On May 29, 2019, the Bank of Canada (BOC) announced that it is keeping its key interest rate at 1.75% – the same rate it has been since October of 2018. The Bank Rate is remaining at 2% and the deposit rate is 1.5%.

However, during the May 29 announcement, the BOC cited an optimistic view of the Canadian housing market.

“Meanwhile, housing market indicators point to a more stable national market, albeit with continued weakness in some regions,” the BOC said.

A recent Teranet-National Bank House Price Index report indicated that the resale market may be stabilizing: https://housepriceindex.ca/2019/05/is-the-resale-market-stabilizing/.

The housing market was not the only factor in the May 29 BOC announcement. Other areas of the economy appear to be picking up, according to the BOC, including the oil sector, continued job growth, consumer spending, and exports.

Areas of uncertainty include rising inventories and trade conflict and restrictions.

Overall, the BOC indicated that it will continue to take a cautious approach moving forward.

“…recent data have reinforced Governing Council’s view that the slowdown in late 2018 and early 2019 was temporary, although global trade risks have increased,” the BOC said.

“In this context, the degree of accommodation being provided by the current policy interest rate remains appropriate.

“In taking future policy decisions, Governing Council will remain data dependent and especially attentive to developments in household spending, oil markets and the global trade environment.”

The next BOC announcement is scheduled for July 10, 2019.

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