Canada column for Sunday, May 31/15
THE CANADIAN REPORT
(c) By Jim Fox
Canada’s central bank has kept its key interest rate steady at 0.75 percent even as it says risks to the country's financial stability remain elevated.
Much of Canada’s fortunes – or lack thereof – is tied to the United States’ economy.
Bank of Canada Governor Stephen Poloz said it is “slightly puzzling” that the U.S. is experiencing a weaker-than-expected economic rebound.
He expressed optimism it would start accelerating in the second half of this year and that could provide a major boost for Canada’s exports.
The bank surprised economists in January when it dropped the key rate to 0.75 percent from 1 percent due to the “unambiguously negative” impacts of plunging oil prices.
The rate remained steady now as the bank said inflation is in line with projections even with the impact of oil.
A watch will be kept on the potential economic implications for Canada if the dollar remains higher than in recent months due to a lower U.S. dollar and slightly rising crude prices.
The bank’s next interest rate announcement will be made on July 15.