Bank of Canada holds steady on key interest rate

The Bank of Canada is keeping its benchmark interest rate unchanged at 1.75 per cent amid declining oil prices.

But the central bank does say it expects the economy to expand.

According to the bank, the recent drop in crude prices will result in slower-than-expected economic growth this year.

It is now projecting growth to be 1.7 per cent in 2019.

That is down from its October forecast of 2.1 per cent.

Looking ahead it anticipates growth starting in the second quarter of 2019 and strong numbers in 2020.

It says rate hikes will be necessary “over time.”

Bank of Canada Governor Stephen Poloz has been gradually raising the rate since mid-2017 to keep inflation from rising too high.

The timing of its next hike will depend on several factors, including developments in the oil markets, the Canadian housing sector and global trade policy.