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Bank of Canada slashes outlook as oil, trade and housing concerns weigh

By BARRIE MCKENNA for The Globe and Mail

The Bank of Canada is keeping its key interest rate unchanged in the face of a new, grimmer forecast that shows Canada’s economy is slowing down fast.

As it did in December, the central bank left its rate at 1.75 per cent Wednesday as the country takes a hit from lower oil prices, weaker housing activity, the U.S.-China trade clash and the decelerating global economy.

The Bank of Canada insists it remains committed to getting interest rates back up to neutral – the level where they are neither driving the economy forward nor slowing it down – but only “over time.”

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“The appropriate pace of rate increases will depend on how the outlook evolves, with a particular focus on developments in oil markets, the Canadian housing market, and global trade policy,” the bank said in a statement.

Bank of Canada Governor Stephen Poloz told reporters that inclusion of the phrase that rates will rise “over time” is meant to “inject ambiguity” into what the bank will do in the months ahead. He said there is “no preset course for rates” as the bank monitors the evolving economy.

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