By TERRY WEBER, Globe and Mail Update
Spooked by weak U.S. and global economic recoveries, the Bank of Canada held steady on interest rates again Wednesday, setting a pattern many economists think will stay in place for the rest of the year.
The central bank's decision leaves its key target for the overnight rate at 2.75 per cent.
It's the second time in as many months that the bank has left interest rates alone after three consecutive hikes earlier in the year.
The Bank of Canada started raising rates in April ― making it the first central bank in any of the Group of Seven nations to do so ― citing Canada's stronger-than-expected economic recovery.
Since then, the Canadian economy has continued to outperform. Last week, Statistics Canada reported that the country's job machine continued to roll forward in September, spitting out still another 40,700 jobs. While the details of that report weren't as strong as those preceding it, the overall tone still suggested an economy still on the roll.
By comparison, the U.S. economy has rebounded in a more uneven fashion, with economists describing the situation in that country similar to that seen in the so-called jobless recovery of the early 1990s.
The U.S. Federal Reserve has yet to act on rates this year, leaving its key federal funds rate at the current four-decade low. Many economists don't expect the powerful U.S. central bank to move on rates until early next year. A few have also suggested that another rate cut isn't entirely out of the question.
The Bank of Canada has cited the softer-than-forecast recovery in the United States ― Canada's biggest trading partner ― as well as weaker conditions overseas as key to its decision not to continue raising rates.
The persistent weakness outside Canada's borders has also prompted economists here to suggest that it's unlikely the Bank of Canada will go back to raising rates in the immediate future.
If this country's robust economic growth were the only factor, TD Bank senior economist Marc Lévesque said in a report last week, the central bank likely would have continued hiking rates in September.
"However, with the risks to the bank's outlook which include weak equity markets, the potential fallout of a conflict with Iraq, and the ongoing struggles of the U.S. economy only worsening since then, the odds are now that the bank will keep rates unchanged for the remainder of the year," he said.
The Bank of Canada has one more fixed-date policy announcement slated for this year on Dec. 3. The Fed makes its next announcement on U.S. interest rates on Nov. 6, followed by its final announcement of the year on Dec. 10.
Spooked by weak U.S. and global economic recoveries, the Bank of Canada held steady on interest rates again Wednesday, setting a pattern many economists think will stay in place for the rest of the year.
The central bank's decision leaves its key target for the overnight rate at 2.75 per cent.
It's the second time in as many months that the bank has left interest rates alone after three consecutive hikes earlier in the year.
The Bank of Canada started raising rates in April ― making it the first central bank in any of the Group of Seven nations to do so ― citing Canada's stronger-than-expected economic recovery.
Since then, the Canadian economy has continued to outperform. Last week, Statistics Canada reported that the country's job machine continued to roll forward in September, spitting out still another 40,700 jobs. While the details of that report weren't as strong as those preceding it, the overall tone still suggested an economy still on the roll.
By comparison, the U.S. economy has rebounded in a more uneven fashion, with economists describing the situation in that country similar to that seen in the so-called jobless recovery of the early 1990s.
The U.S. Federal Reserve has yet to act on rates this year, leaving its key federal funds rate at the current four-decade low. Many economists don't expect the powerful U.S. central bank to move on rates until early next year. A few have also suggested that another rate cut isn't entirely out of the question.
The Bank of Canada has cited the softer-than-forecast recovery in the United States ― Canada's biggest trading partner ― as well as weaker conditions overseas as key to its decision not to continue raising rates.
The persistent weakness outside Canada's borders has also prompted economists here to suggest that it's unlikely the Bank of Canada will go back to raising rates in the immediate future.
If this country's robust economic growth were the only factor, TD Bank senior economist Marc Lévesque said in a report last week, the central bank likely would have continued hiking rates in September.
"However, with the risks to the bank's outlook which include weak equity markets, the potential fallout of a conflict with Iraq, and the ongoing struggles of the U.S. economy only worsening since then, the odds are now that the bank will keep rates unchanged for the remainder of the year," he said.
The Bank of Canada has one more fixed-date policy announcement slated for this year on Dec. 3. The Fed makes its next announcement on U.S. interest rates on Nov. 6, followed by its final announcement of the year on Dec. 10.
