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Lingering Uncertainty Maintains Cautious
Stance From Central Bank
Monetary authority wants more information on trade. The Bank of Canada held its policy rate at 2.75 per cent for the second consecutive month – a move that was widely expected from both swap markets and economists. Similar to the last announcement, uncertainties surrounding fluid trade policy stemming from the United States remain high. Because these risks are potentially inflationary, the monetary authority wants more clarity before making its next move. At the same time, economic growth in the first quarter came in slightly stronger than expected. While much of this was due to tariff front-loading, household consumption was also resilient. The Bank’s preferred measures of core inflation, along with other metrics of underlying price pressures, moved up as well. As uncertainties are still high and the Canadian economy did not weaken sharply, the central bank decided to hold the policy rate in order to see how the coming month unfolds.