Classifieds | Archives | Jobs | About TGT | Contact | Subscribe
 | 
Last updated 3 minutes ago
Printer Friendly Version | TGT@Twitter | RSS Feed |
HOME LOCAL MIDEAST ASIA WORLD BUSINESS SPORT OPINION WRITERS
Bank of Canada holds rates
December 08, 2017
 Print    Send to Friend

OTTAWA: The Bank of Canada, the central bank, held interest rates steady, as expected, and took a cautious tone even as it said more rate hikes are likely in store amid diminishing slack in the labour market and signs of inflation pressures.

Striking a more dovish tone than expected after very strong employment data, the bank gave few hints at when the next rate hike will come soon, reducing expectations it would move as early as January. The Canadian dollar sagged in response.

“I think on balance their overwhelming focus remains on the uncertainties; so they provided no clue of a rate hike anytime soon, which is a strong message to markets that they are not going to budge until they get further clarity on NAFTA and other related risks,” said Derek Holt, head of Capital Markets Economics at Scotiabank.

While the bank held firm with a warning that more rate hikes are likely in store after moves in July and September, it noted uncertainty about trade and other geopolitical developments.

Economists fear Canada’s export-driven economy would be hurt by the demise of the North American Free Trade Agreement, which US President Donald Trump has targeted for overhaul. Some 75 per cent of exports go to the United States.

The Canadian dollar weakened as investors reduced the odds of a rate hike early in 2018, touching C$1.2777 to the US dollar, or 78.27 US cents, from 1.2664 before the rate decision.

Unexpectedly strong job gains in November took the unemployment rate to 5.9 per cent, its lowest since February 2008, but the bank said other indicators point to ongoing, albeit diminishing, slack in the labor market. “It is a little bit surprising how strongly they are leaning against the recent improvements in the labor market data,” said Andrew Kelvin, senior rates strategist at TD Securities.

Paul Ferley, assistant chief economist at Royal Bank of Canada, said the bank will resume rate hikes if economic data is sufficiently strong through the second quarter of 2018. The central bank said recent Canadian data are in line with its October outlook, though it noted inflation has been slightly higher than expected, reflecting the continued absorption of economic slack.

It noted that business investment continued to contribute to growth after a strong first half to 2017, and said public infrastructure spending is becoming more evident in the data.

Meanwhile, Canada labor productivity drops for second consecutive quarter The labor productivity of Canadian businesses fell by 0.6 per cent in the third quarter, the second consecutive decline, as the number of hours worked grew faster than business output, Statistics Canada said on Wednesday.

Reuters

Add this page to your favorite Social Bookmarking websites
Comments
 
Post a comment
 
Name:
Country:
City:
Email:
Comment:
 
    
    
Related Stories
Canada’s retail sales rise
OTTAWA: Canada’s retail sales rose far less than expected in September as higher gasoline prices were offset by a decline in purchases of cars and clothes, pointing to co..
Manulife and Sun Life beat earnings forecasts
TORONTO: Two of Canada’s biggest insurance companies reported third-quarter earnings that beat market expectations, benefiting in part from strong growth in Asia. Cana..
Canada holds rates steady
OTTAWA: Canada’s central bank (CB) held interest rates steady, as expected, even as it said the economy was at or near full capacity, signaling it was willing to let the ..
Canada sets mortgage rules
TORONTO: Canada’s banking regulator has finalised tougher new rules on mortgage lending aimed at safeguarding lenders and borrowers, but warned the measures could push so..
Canada exports drop again, clouding outlook for October rate hike
OTTAWA: Canada’s trade deficit widened unexpectedly in August as exports fell for the third month in a row, a sign of economic weakness that analysts say could help deter..
FRONTPAGE
 
GALLERY
 
PANORAMA
 
TIME OUT
 
SPORT
 
 
Advertise | Copyright