Bank of Canada holds key rate steady as Middle East war clouds outlook

In his speech before the press conference on April 29th, Governor Tiff Macklem suggested that, "if the United States were to impose significant new trade restrictions on Canada, we may need to cut the policy rate further to support economic growth.

Alternatively, if oil prices continue to increase, and particularly if they remain elevated, the risk that higher energy prices become ongoing generalized inflation increases. If this starts to happen, then there may be a need for consecutive increases in the policy rate."

It is highly unlikely that the Bank of Canada would tighten monetary policy when the housing and job markets are as depressed as they are today.

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres