Wednesday January 22, 2020 ~ NATIONAL
by Mary Brooke ~ West Shore Voice News
The Bank of Canada has not adjusted their benchmark interest rate today. It remains at 1.75% where it has been for now 15 months.
A comment from Bank of Canada Governor Stephen Poloz included that consumer support of the economy is soft. With people spending less it wouldn’t help to raise interest rates.
Despite trade developments in various areas around the world “a high degree of uncertainty” remains, said Poloz. That would include tremulous relations with the United States, politically challenged relations with China, and the bumpy ride that will last for at least a while with the UK due to Brexit after January 31.
Inflation was 1.9% in 2019, below the 2.0% that Canada was seeking.
Economic pundits are suggesting there will be a drop in the Bank of Canada benchmark rate this year, by 0.25% or even 0.50%. This is especially likely if consumers continue to be cautious with spending.
Apparently the bank says that “Canada’s economy is being more negatively impacted by global headwinds than previously thought,” wrote Josh Nye, Senior Economist, RBC Economics Royal Bank of Canada in an economic analysis today.
BC Budget 2020 being delivered February 18 will likely also respond to softer consumer spending and global uncertainty, as indicated by BC Finance Minister Carole James last fall. She noted a drop in consumer spending on big ticket items like appliances and cars.
Usually a timid consumer spending level is in response to business investment pulling back. When companies are not bullishly expanding, employees sense this and the self-employed sector feels it too.