Canada’s central bank has kept its key interest rate steady at 0.75 percent even as it says risks to the country’s financial stability remain elevated.
Much of Canada’s fortunes – or lack thereof – is tied to the United States’ economy.
Bank of Canada Governor Stephen Poloz said it is “slightly puzzling” that the U.S. is experiencing a weaker-than-expected economic rebound.
He expressed optimism it would start accelerating in the second half of this year and that could provide a major boost for Canada’s exports.
The bank surprised economists in January when it dropped the key rate to 0.75 percent from 1 percent due to the “unambiguously negative” impacts of plunging oil prices.
The rate remained steady now as the bank said inflation is in line with projections even with the impact of oil.
A watch will be kept on the potential economic implications for Canada if the dollar remains higher than in recent months due to a lower U.S. dollar and slightly rising crude prices.
The bank’s next interest rate announcement will be made on July 15.
Resource-rich Alberta cannot avoid a recession this year, the Conference Board of Canada says.
The board projects 24,000 jobs will be lost in the construction and mining sectors that will impact the housing market and retail sales.
“Alberta’s economic performance will be underwhelming this year and next, especially compared with recent years,” said Marie-Christine Bernard, the board’s associate director.
“Oil prices remain well below break-even levels for most new projects in the oil patch and conditions are not expected to turn around until sometime next year,” she added.
The province’s economy is expected to shrink by 0.7 percent this year even though oil prices have firmed recently to about $60 a barrel.
News in brief
▪ The Canadian post office is facing a lawsuit from a union representing postal workers seeking to have the Federal Court declare that the cancelation of home mail delivery is unconstitutional. In Hamilton, Ontario, the municipality is challenging plans by Canada Post over the placement of community mailboxes in part of its plan to stop home mail delivery as a cost-cutting move.
▪ Montreal Mayor Denis Coderre wants to play ball and has asked Rob Manfred, the commissioner of Major League Baseball, to consider holding three or four regular-season games in the city next year. Coderre made the request in a meeting with Manfred in New York, citing a successful exhibition series between the Toronto Blue Jays and the Cincinnati Reds at Olympic Stadium. Montreal has been without a franchise since the Expos last played in 2004.
Facts and figures
The Canadian dollar has dipped to 80.41 cents U.S. while the U.S. dollar returns $1.2435 in Canadian funds, before bank exchange fees.
The Bank of Canada’s key interest rate is steady at 0.75 percent while the prime-lending rate is 2.85 percent.
Markets are lower, with the Toronto Stock Exchange index at 15,079 points and the TSX Venture index 691 points.
The average price of gasoline across Canada is slightly lower at an average of $1.13 a liter or $4.30 (Canadian) for a U.S. gallon.
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▪ About 70,000 high school students returned to class Wednesday after the Ontario Labor Relations Board ruled that teachers’ strikes in Durham, Peel and the Sudbury area lasting one to four weeks were illegal. As well, the Liberal government then passed back-to-work legislation to try to avert threatened massive strikes across the province by teachers, upset about larger class sizes in a proposed new contract.
▪ Forty-four years of Conservative party rule ends today when New Democrat Rachel Notley becomes Alberta’s Premier. Notley and her party are being sworn in on the grounds of the legislature in Edmonton. The socialist party ousted the Conservatives by winning a 54-seat majority in the May 5 election.
Contact JIM FOX at email@example.com.