The Bank of Canada announced Wednesday that they’re maintaining the key interest rate of 0.5%.
Globally, the world’s economy is expected to strengthen gradually, but more slowly than the January Monetary Report suggested. While the US economy is forecasted to gain some momentum in 2016, the lower profile and composition will result in unfavourable conditions for Canadian exports.
The price of oil has risen more than the Bank of Canada initially predicted, but are still well below historical averages – in spite of the rise, more energy sector investment cuts are likely on their way for Canada than January predictions suggested.
Due to the shock of oil prices here in Canada, the bank predicts economic growth will be slow as we continue to adjust. With that said, first-quarter GDP results were unexpectedly strong, largely because of temporary factors that will adjust in the second quarter.
The economy is, however, creating new jobs. Statistics Canada says employment grew by 41,000 in the month of March, largely in the healthcare and social assistance industries, as well as food services and hospitality.
The Bank of Canada is now predicting real GDP growth of 1.7% in 2016, 2.3% in 2017, and 2% in 2018.