The Bank of Canada’s decided to keep its benchmark lending rate at 0.5% even as it downgrades its outlook for an economy feeling the hit from falling commodity prices.
While there were some expectations the central bank would cut the rate given poor economic forecasts, governor Stephen Poloz announced Wednesday he was holding the line.
The bank says it did so because the key indicator in its decision, inflation, has been unfolding as expected within its ideal target range.
The Bank of Canada did lower its growth forecast to 0.3% in the final three months of 2015, downgraded its 2016 projected to 1.4% from an even 2% in the fall and expects the economy to rebound and see growth of 2.4% in 2017.
The central bank also anticipates benefits from the Trudeau government’s promise to spend billions on infrastructure but is not factoring in the potential impact until the Liberals provide details.