By: JESSE SNYDER-
WASHINGTON(Financial Post) – The Bank of Canada’s decision on Wednesday to maintain its current overnight rate is led by fears over high household debts and souring negotiations around the North American Free Trade Agreement, both of which could restrict inflation growth and delay future rate hikes.
Interest rates were kept at 1 per cent, a move that was widely expected following rate hikes in July and September. The decision reinforced the more dovish tone adopted by the bank in recent months, running somewhat in contrast to Ottawa’s cheery budget update released Tuesday.
The bank said a “pronounced” drop in Canadian housing prices, stronger U.S. GDP growth, rising household debt levels and threats by U.S. president Donald Trump’s administration to shred NAFTA are looming risks to the Canadian economy.
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