The loonie falls 0.5% against the U.S. greenback after the Bank of Canada keeps its key interest rate unchanged at 1.75%.
The central bank said data indicate that “growth in the near term will be weaker, and the output gap wider, than the Bank projected in October.”
Now estimates Q4 2019 growth of 0.3% and Q1 2020 growth of 1.2%, noting that business investment apparently weakened after a strong Q3.
Says “a high degree of uncertainty and geopolitical tensions have re-emerged.”
“In determining the future path for the Bank’s policy interest rate, Governing Council will be watching closely to see if the recent slowdown in growth is more persistent than forecast,” the Bank of Canada said. It will pay particular attention to consumer spending, the housing market, and business investing.
Sees global economy growth of just over 3% in 2020 and 3.25% in 2021; in the October, BoC expected global growth rising above 3% in both 2020 and 2021.
For Canada, BoC sees real GDP growth of 1.6% in 2020 and 2% in 2021, after 2019’s estimated 1.6% growth. In October, it expected 1.7% growth in 2020 and 1.8% in 2021.