BMO senior economist Robert Kavcic said two interest rate cuts are already being priced into US markets.
In its April outlook, the bank predicted relatively weak growth of 1.3 per cent in the second quarter.
It's the third time in 2019 that the interest rate has held steady at 1.75% after the Canadian economy showed signs of returning to potential growth.
"While recent export data for Canada have been encouraging, the trade environment continues to be the biggest wild card in our outlook", Carolyn Wilkins, senior deputy governor, said at a press conference in Ottawa.
As policymakers in the United States and Europe signal they may introduce cuts, governor Stephen Poloz is not committing to any moves to change the rate. The bank's Wednesday forecast of 1.3 per cent growth for 2019 is just below the average private sector forecast of 1.4 per cent.
The central bank's projection for second-quarter domestic growth was at the low end of the range of 2.25% to 3% forecast by analysts.
Canadian banks rode a wave of interest-rate hikes to higher profits in 2017 and 2018, in part because of gains in net interest income, generated by the spread between the higher rates they charge for loans and the lower rates they pay out on customer deposits.Читайте также: Judge blocks Justice Department move to change lawyers in 2020 census case
U.S. Federal Reserve chairman Jerome Powell signalled Wednesday that a U.S. rate cut was likely later this month due to slowing global growth and trade conflicts. There's probably a little greater chance of a rate cut if the Fed does see the need to cut rates more rapidly.
The Canadian dollar pared earlier gains following the decision, but was still up 0.3 per cent to C$1.3091 per US dollar. We are anticipating a couple of rate cuts from the Fed.
In testimony to USA lawmakers Wednesday, Fed Chairman Jerome Powell seems to have pushed the central bank closer to cutting interest rates this month by saying the economy continues to face downside risks including the U.S.
Global trade tensions, meanwhile, have escalated, particularly between the US and China, forcing policy makers to mark down their projections for global growth and lower estimates for business investment and exports. "Taken together, the degree of accommodation being provided by the current policy interest rate remains appropriate". "For the USA divisions, we incorporate practical NIM (earn hobby margin) compression in 2019-21E".
Wide Canadian banks, on the other hand, possess to fear about more than neatly suited the hobby-rate moves of the Financial institution of Canada.
"Escalating trade conflicts, geopolitical tensions and related uncertainty are contributing to the broad-based slowdown of global economic activity", the bank said in its latest monetary policy report.
Sal Guatieri, a senior economist with BMO Capital Markets, said the risks to the Bank of Canada's policies "are more even-handed" than its USA counterpart, which could push through more than one cut.При любом использовании материалов сайта и дочерних проектов, гиперссылка на обязательна.
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