Bank of Canada holds rates, frets about trade war damage

Bank of Canada head expected to hold interest rates steady

"Trade conflicts and uncertainty are projected to cut the level of Canadian GDP by as much as 2% by end-2021". However, the Bank of Canada doubts that burst of activity will last. Still, the emphasis on trade risks is prompting some questions about the central bank's confidence in the country's rebound. Moreover, the US central bank has been pressured by President Donald Trump to cut rates. The bank's governing council will also consider positive signs on trade, including a cease fire between China and the US and the lifting of American tariffs on Canadian goods, he said.

Canadian lenders possess offered guidance in the new atmosphere that earn hobby margins will produce bigger around one to two foundation points per quarter, Colangelo said, which can presumably well well alternate if there used to be a rate reduce. Stocks are also paring gains. But U.S. President Donald Trump's trade wars are killing factory production and business investment around the world.

"Recent data show the Canadian economy is returning to potential growth". The immediate rebound has been stronger than expected, with the Bank of Canada revising up its growth projections for the second quarter to an annualized 2.3%. In light of recent encouraging data, the BoC had upgraded their Q2 GDP forecast to 1.3% from 1% citing an unwind of the temporary factors that had plagued GDP growth in the beginning of the year.

However, it sounded a note of concern about global trade tensions amid the current tiff between the United States and China. These include new Chinese trade restrictions on Canadian agricultural goods, the bank said.

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Canada´s central bank on Wednesday held its key lending rate at 1.75 percent in line with economists´ expectations, while revising its growth forecast for the Canadian economy upwards. "So clearly the growing wave of negative sentiment around the globe is impacting the Bank of Canada's view on the outlook", said Andrew Kelvin, chief Canada strategist at TD Securities. "However, with the BoC in a holding pattern on future rate hikes and loan growth moderating, the outlook for net interest income remains tempered".

Broader global trade tensions are driving down commodity prices and are outweighing some positive developments, such as the removal of US tariffs on Canadian steel and aluminum.

Today the Bank of Canada acknowledged that fair summertime weather and an active energy sector could bode well. For the sixth-straight meeting, this was said to be based upon balances among domestic economic improvements with an expanding global slowdown caused by trade conflicts.

The fallout from higher tariffs between the US and China prompted the Bank of Canada to increase its estimate for how much the enduring clash over cross-border commerce is weighing on domestic and global exports as well as business investment relative to April. The Financial institution of Canada is determined to present one other hobby-rate announcement on Wednesday, which follows the news final week that the Canadian economic system shed around 2,200 jobs in June (despite the indisputable truth that the unemployment rate remained at a reach-account low).

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