Bank of Canada raises rate, predicts economic resilience despite trade risks
OTTAWA — Undaunted by expanding trade risks, the Bank of Canada governor Stephen Poloz raised the interest rate Wednesday and signalled the economy’s resilience is keeping him on a hiking trajectory.
The quarter-point increase, the central bank’s first move in six months, brought the rate to 1.5 per cent. It was Poloz’s fourth hike over the last 12 months and marked the first time the rate has been this high since December 2008.
The decision, a move that prompted some of the big banks to start raising their prime rates later in the day, arrived in the middle of a trade dispute between Canada and the United States that’s expected to hurt both economies.
Poloz made the call even though he warned the economy should brace for larger impacts from mounting trade uncertainty. In particular, the trade impacts were caused by the Trump administration’s recent steel and aluminum tariffs on Canada and, in response, Ottawa’s retaliatory duties on U.S. imports.