As widely expected, the Bank of Canada left its benchmark interest rate unchanged for the ninth straight meeting.
The overnight rate stays at 1.75 per cent — where it’s been since last October. The last move was a hike in the middle of 2017.
The Bank of Canada says the global economy is performing as expected.
“There is nascent evidence that the global economy is stabilizing, with growth still expected to edge higher over the next couple of years,” it said in a release.
“Financial markets have been supported by central bank actions and waning recession concerns, while being buffeted by news on the trade front.”
With that said, the Bank of Canada sees the uncertainty of trade conflicts weighing on global growth, and that remains the biggest risk to its outlook.
Steady as she goes
“It's steady as she goes for Captain Poloz with six months left in his term as Governor. Today's statement can be characterized as glass half full, especially when compared to the more cautious tone struck in October,” said Benjamin Reitzes, BMO (BMO.TO) Capital Markets director and Canadian rates and macro strategist, in a note.
“The risks around the economic outlook remain skewed to the downside and, while the same can be said for policy rates, some anticipated fiscal stimulus will likely provide the Bank of Canada with some breathing room.”
Bank of Canada Governor Stephen Poloz hasn’t ruled out an interest rate cut down the road if warranted. Reitzes says he expects rates to stay on hold, barring a shock to the economy.
The loonie gets a lift
Canada’s central bank has been something of an outlier among central banks. It has taken a wait-and-see approach during a series of rate cuts by the U.S. Federal Reserve, most recently in October.
“The Bank of Canada is sticking to its guns as the only major central bank that hasn’t eased monetary policy and it doesn’t appear to be contemplating a change, issuing a less dovish policy statement than expected Wednesday and thereby igniting a modest advance by the recently sluggish loonie,” said Don Curren, market strategist and content editor, Cambridge Global payments in a note.
“The Canadian dollar (CAD/USD) gained about 0.3 per cent against its U.S. counterpart in the aftermath of the Bank’s policy statement, its last of 2019.”
A clear choice for mortgage shoppers
Variable-rate mortgages, which are tied to the Bank of Canada’s overnight rate, stay where they are. That makes fixed-rate mortgages the better choice these days.
“Anyone with a variable rate will be disappointed that Canada is not following other central banks who have consistently been reducing their rates,” James Laird, co-founder of Ratehub, told Yahoo Finance Canada.
“Entering 2020, Canadians can expect the current low fixed mortgage rates to continue, which is good news for anyone looking to purchase a home in the spring market. If you plan to shop for a home, getting a pre-approval now is a great idea as it will hold today’s rates for the next four months.”
The next interest rate decision is on January 22.
Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.