(Canada Press)

Update: Bank of Canada holds interest rate at 1.75%

Dip in monthly GDP and lower-than-expected oil prices have dampened growth expectations

Update: 7:15 a.m.

The Bank of Canada left its interest rate unchanged today and says the timing of future hikes will depend on factors such as how long the oil-price slump lasts, how well business investment picks up its pace and how much room the economy still has left to grow.

The central bank is holding its trend-setting rate at 1.75 per cent in a decision that follows a quarter-point increase at its previous policy meeting in October.

The bank has been on a gradual rate-hiking path for more than a year thanks to a strengthening economy and has already raised the benchmark five times since the summer of 2017.

The bank says it will keep a close eye on the evolution of several recent developments as it considers the timing of its next rate hike — including a steep slide in oil prices that it predicts will reduce activity in Canada’s energy sector.

It also says recent data show that the economy has less momentum heading into the final quarter of 2018 related to factors such as a drop in business investment that the bank largely connects to trade uncertainty last summer.

The bank also notes it will be watching for positive developments such as signs the economy can still expand without stoking inflation.

The central bank can raise the interest rate to prevent inflation from climbing too high. Many market watchers had expected governor Stephen Poloz to wait until at least January before his next rate increase.

The Bank of Canada has estimated it will no longer need to increase the interest rate once it reaches a level of between 2.5 per cent and 3.5 per cent, but Poloz has said this destination range remains “sufficiently uncertain” and could move up or down.

Read more: Higher interest rates to hit younger, middle-income households

—-

Original:

The Bank of Canada is widely expected to leave its benchmark interest rate unchanged at 1.75 per cent today after a 25-basis-point increase at its last setting in October.

This morning’s announcement comes in the wake of a move by the Alberta government to curtail oil production in the province after Jan. 1 to try to clear a crude storage glut that has driven western Canadian oil prices to multi-year lows.

RELATED: Bank of Canada holds interest rate at 1.5 per cent in September

Meanwhile, the recently announced plan to close the General Motors of Canada car plant in Oshawa, Ont., similarly offers a downside risk to future growth.

Bank economists say an unexpected dip in monthly gross domestic product figures in September and lower-than-expected oil prices so far in the fourth quarter have dampened growth expectations and placed in doubt forecasts for a January bank rate increase.

Lower growth prospects are expected to reinforce Bank of Canada Governor Stephen Poloz’s strategy of moving very gradually on increases to its overnight rate.

Economists say they will be closely watching Poloz’s speech on Thursday for signs of how events are affecting his view of the path forward.

The Canadian Press

Like us on Facebook and follow us on Twitter.

Just Posted

Cleaning combustion with hydrogen: UBC Okanagan researchers

Study seeks to uncover benefits of injecting hydrogen into natural gas distribution networks

Kelowna’s first pot shop opening soon

Two recreational cannabis stores to serve Kelowna-area soon

Kelowna Aquajets swim to 11th place finish in U.S. competition

The Kelowna earned 10 medals in the 23 team competition

Kelowna house fire deemed not suspicious

Fire crews doused overnight blaze at Barnaby Road home

Pot shop to open doors Saturday in Lake Country

Starbuds will be one of B.C.’s largest private cannabis stores

3 dead, 2 missing in northern B.C: Here’s what we know so far

Lucas Fowler, 23, and his girlfriend, Chynna Deese, were shot and killed on July 14 or 15

Horgan hints at Daylight Saving Time changes after record survey response

More than 223,000 online surveys were submitted in the government’s public consultation

UPDATE: Lightning causes three wildfires east of Osoyoos

It is believed the fires started by a lightning storm

Two lightning caused fires in North Okanagan

The fires sparked Monday evening

Jurors talk about trial of U.S. man convicted in 1987 murders of B.C. couple

Three jurors offer a window into deliberations during the trial

Tubing world record broken on Vancouver Island

But record for length of tubes linked together still has to be confirmed

UPDATE: Culprit leaves clue for Okanagan RCMP in rainbow crosswalk vandalism

Crosswalk was defaced on the weekend, but RCMP may have some evidence

The Beaverton’s sharp satire thrives in polarized political climate

Canadian TV series’ third season to air Tuesday on CTV after “The Amazing Race Canada”

VIDEO: Young couple found dead in northern B.C. had been shot, police say

Chynna Noelle Deese of the U.S. and Lucas Robertson Fowler of Australia were found along Highway 97

Most Read