Canada’s central bank on Wednesday maintained its key lending rate at 1.75 percent, saying it is cautiously optimistic that global growth is set to rebound and recession fears are “waning.” “There is nascent evidence that the global economy is stabilizing,” the Bank of Canada said in a statement, adding that growth was “expected to edge higher over the next couple of years.” Financial markets, it said, have been bolstered by “waning recession concerns” despite being “buffeted by news on the trade front.”
Earlier, Wall Street stocks rose on upbeat reports on US-China trade talks. Worries about the on-again off-again negotiations have pressured stocks in recent days, leading to three straight declines.
But analysts cited a Bloomberg News report that characterized Washington and Beijing as near finalizing a partial trade agreement that would avert new tariffs threatened for later this month.
While others around the world, including the US Federal Reserve, have cut rates in recent months in an attempt to stimulate their economies and head off a global downturn, the Bank of Canada’s main lending rate has stood at 1.75 percent since October 2018.
It noted that ongoing trade conflicts and “related uncertainty are still weighing on global economic activity, and remain the biggest source of risk to the outlook.” Canada’s economy slowed in the third quarter to 1.3 percent as exports fell, but consumer spending, housing and business investment have been strong.
Inflation also remains near the central bank’s 2.0 percent target, which it said was “consistent with an economy operating near capacity.” CIBC analyst Andrew Grantham commented that the bank’s overall statement was “a little more hawkish than markets were expecting.”