BoC increases benchmark rate to 1.75% from 1.5%

Wednesday, 24. October 2018 17:38

The Bank of Canada lifted the overnight interest rate for the third time this year on Wednesday. The benchmark was again boosted by 25 basis points, reaching 1.75%. Governor Stephen Poloz warned the trade dispute between the United States and Canada is potentially damaging for its export growth pace.

The economic activity is near potential and economic expansion is "relatively broad-based across sectors and regions," he added and noted inflation is close to target. The US-Mexico-Canada Agreement (USMCA) was praised in the announcement for reducing trade policy uncertainty. The central bank highlighted the return of financial market volatility but claimed that conditions remained stimulative on a global scale.

Rate-setters said borrowing costs have to be raised to a neutral level to "achieve the inflation target." They stressed the policy rate remained negative in real terms.

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