“This less aggressive stance on interest rates partly reflects concerns over NAFTA renegotiations and, to a lesser extent, the stronger Canadian dollar,” David Madani, senior Canadian economist at Capital Economics, said in emailed commentary.
In its accompanying statement, the BoC said that the global and Canadian economies are progressing as outlined earlier this year, and that it expects global growth to average around 3.5 pecent between 2017 and 2019.
The bank, however, cautioned that its outlook “remains subject to substantial uncertainty about geopolitical developments and fiscal and trade policies, notably the renegotiation of the North American Free Trade Agreement.”
The U.S. came out swinging during the fourth round of NAFTA re-negotiations, which ended last week, renewing concerns the agreement could collapse.
The US presented a number of tough proposals, including the addition of a sunset clause, which would lead to NAFTA expiring every five years unless all three countries agreed to extend it. Mexico and Canada rejected the U.S.’s proposals.
Last month, the central bank unexpectedly hiked rates by 25 basis points, citing stronger than expected data.
The Canadian dollar was down by 0.7 percent at 1.2771 per U.S. dollar at 10:11 a.m. ET.
This article was originally published on Business Insider. Copyright 2017.
