Thursday, 15 April 2021 04:52 GMT

Canada central bank maintains key lending rate at 0.5%


(MENAFN - AFP) Canada's central bank maintained its key lending rate at 0.5 percent Wednesday in hopes of bolstering lagging business investment, while forecasting an uptick in global growth this year and next.

Financial market volatility and "heightened concerns" about a lack of momentum in the Canadian export-driven economy "appears to be abating," the Bank of Canada said, but the oil rout continues to dampen growth and investments in oil producing nations such as Canada, which is ranked the fifth largest oil producer in the world.

The central bank noted a rebound in commodity prices and the Canadian dollar, from a 12-year low, in recent weeks.

US expansion remains on track, and non-energy exports are picking up, it said.

As a result, Canadian employment has remained strong despite massive job losses in resource-rich regions, notably Alberta province.

However, business investment is still "very weak" due to retrenchment in the resource sector, the bank said.

Household spending continues to underpin domestic demand.

Analysts expected the bank to wait until next month before announcing a change in its monetary policy. On Wednesday the Bank of Canada signaled it wanted to measure the impact of the Canadian government's stimulus budget on March 22 before updating its projections.

Prime Minister Justin Trudeau campaigned on pledge to spend tens of billions of dollars to spur growth.

"The Bank of Canada tried to say as little as possible today as it waits to see what stimulus the federal budget delivers," commented Avery Shenfeld, chief economist at CIBC Economics.

"So there wasn't much concern expressed here about the rebound in the Canadian dollar and its impact on export growth, but nor was there more than a short nod to growth coming in above expectations in Q4 and likely headed that way in Q1," he added.


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