Bank of Canada expected to raise interest rate as some trade uncertainty recedes

OTTAWA — With some trade uncertainty now out of the way, the Bank of Canada is widely expected to hike its benchmark interest rate today for the fifth time since the summer of 2017.

This morning’s policy decision will be the central bank’s first since Canada agreed with the United States and Mexico earlier this month on an updated North American free trade deal.

The bank left the rate unchanged at its last policy meeting in September and senior deputy governor Carolyn Wilkins later said the unknown consequences of the continental trade talks — as well as the tit-for-tat tariff dispute — were front and centre in the decision.

Governor Stephen Poloz’s rate announcement today will also come as the Canadian economy continues to show signs of strength and the unemployment rate remains close to a four-decade low.

A hike would be Poloz’s first increase since July, when the rate rose 25 basis points to 1.5 per cent.

The central bank has carefully followed a gradual, data-dependent approach to raising the rate to assess factors, including how smoothly indebted households absorb the increases.

The Canadian Press