The Bank of Canada monetary policy statement from July meeting

Image of daily change for major currencies

Bank of Canada delivers another hike, key interest rate rises to 1.5%

The central bank's rate decision arrives as Canada faces significant trade-related uncertainties, including stalled NAFTA talks, USA steel and aluminum tariffs and the threat of more duties on the automotive sector.

The Bank Rate is correspondingly 1 ¾ per cent and the deposit rate is 1 ¼ per cent.

"Despite hiking rates today, the Bank of Canada is in no rush to continue pushing rates higher given the uncertainties surrounding trade, lingering concerns about housing and household debt, and renewed belief that there's some labour market slack".

Scott Hannah says higher interest rates have also helped to cool down the country's real estate markets, helping future homeowners.

The central bank said it expects the Canadian economy to expand by 2 per cent per year on average between 2018 and 2020, noting that recently implemented tariffs on steel and aluminium will likely have only "modest" effects on growth and inflation.

Man exposed to flesh-eating bacteria while crabbing
Doctors at Cooper University Hospital, where Perez is listed in critical condition, are trying to save all four of his limbs. Angel Perez, 60, reportedly complained of swelling and growing pain in his right leg after coming home on July 2.

Governor Stephen Poloz said trade tensions were the biggest issue on the table.

CPI and the Bank's core measures of inflation remain near 2 per cent, consistent with an economy operating close to capacity.

As in April, the projection incorporates an estimate of the impact of trade uncertainty on Canadian investment and exports.

US tariffs on the auto sector's integrated cross-border supply chains would have "large impacts on investment and employment", the Bank of Canada warned Wednesday in its accompanying monetary policy report. However, it intends to continue with its gradual, data-dependent approach.

As widely anticipated by economists, the Bank of Canada raised its trend-setting policy rate to 1.5 per cent, up from 1.25 per cent on Wednesday. Inflation ran at a 2.2-per-cent pace in May, slightly above the Bank's target of 2 per cent. It's expected to settle back down to 2% in the second half of 2019.

Latest News