By Gordon Isfeld
OTTAWA (MaceNews) – Growing pressure on the global economy may not have seriously dented the outlook for Canada’s near-term growth, but other factors – such as international trade frictions and lingering squabbles over how to resolve the Brexit crisis – are continuing to contribute to growth uncertainty.
“Evidence has been accumulating that ongoing trade tensions are having a material effect on the global economic outlook,” the Canada’s central bank warned Wednesday in its quarterly Monetary Policy Report.
“Trade conflicts between the United States and China, in particular, are curbing manufacturing activity and business investment, and pushing down commodity prices,” monetary policymakers said.
While the Brexit issue remains unresolved as the British government struggles to reach agreement on how and when to leave the European Union, the overall economy also remains questionable.
“Escalating trade conflicts, geopolitical tensions and related uncertainty are contributing to the broad-based slowdown of global economic activity and a moderation in the growth of both trade and business investment,” Canada’s central bank said in its latest MPR, which outlines economic factors contributing to the .
“Many central banks have responded to softer economic outlooks and weaker inflation expectations by signaling shifts toward more accommodative monetary policy.”
For now, the Bank of Canada is maintaining its key lending rate at 1.75 per cent, a level that has remained unchanged since October of 2018 and where policymakers appear content with the current economic environment – at least for the foreseeable future – as the domestic economy grows at a sustainable level.
“Growth in the second quarter appears to be stronger than predicted due to some temporary factors, including the reversal of weather-related slowdowns in the first quarter and a surge in oil production,” the central bank noted Wednesday in its quarterly report.
“Consumption is being supported by a healthy labour market. At the national level, the housing market is stabilizing, although there are still significant adjustments underway in some regions. A material decline in longer-term mortgage rates is supporting housing activity.”
Stephen Poloz, the governor of the Bank of Canada, told reporters during a news conference in Ottawa that “we’re data dependent, we’re always data dependent.”