Bank of Canada holds key interest rate at 2.25%

The Bank of Canada announced Wednesday that the key interest rate will remain unchanged at 2.25 per cent, as well as an unchanged overnight rate and deposit rate.

Canada’s central bank held its target for the overnight rate at 2.25 per cent and the deposit rate at 2.20 per cent.

The policy rate held after the bank lowered it by a quarter point in October, saying it signaled it to be the right rate to keep inflation in check.

The bank says the Canadian economy showed a surprisingly strong 2.6 per cent annualized growth in the third quarter, while seeing the unemployment rate dropping by 0.4 percentage points to 6.5 per cent in November.

It says the increase in the Gross Domestic Product largely reflected volatility in trade, but expects final domestic demand to grow in the fourth quarter despite an anticipated drop in net exports.

The Bank of Canada says major economies around the world held strong against U.S. trade protectionism, despite high levels of uncertainty.

It further said global financial conditions, oil prices and the Canadian dollar are all roughly unchanged since the bank’s October report.

The Bank of Canada lowered interest rates by one percentage point this year over a series of moves.

The next overnight rate target announcement is set to be released on Jan. 28.

With files from The Canadian Press.

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