Source: The Canadian Press

Bank of Canada governor Mark Carney is widely expected to keep the trendsetting policy interest rate at 1% at this morning’s meeting.

Carney hiked rates three times during the summer months but put a stop to his tightening policy in October after the recovery began exhibiting signs of stalling.

Carney had been the only banker among the Group of Seven nations who had moved to tighten policy.

Things haven’t gotten any better since. In fact, recent data showed economic growth braking further to 1% in the third quarter, less than half the pace of the second.

As well, Canada hasn’t had solid jobs report since June, with November’s numbers showing a modest rise in part-time workers, but a decline in full-time employment.

Meanwhile, fewer Canadians are actively looking for work. By one calculation, without the decline in labour force participation, unemployment would be 9.1%, not the official 7.6% rate.

And the country’s manufacturing sector remains on the shop floor, held down by a strong loonie that makes goods harder to sell in foreign markets and low demand in the U.S.

With such lacklustre results and facing strong headwinds, the vast majority of economists say Carney would risk doing real damage to the economy by raising rates further.

Some analysts, however, believe Carney will acknowledge the bad news of the past few months and may further downgrade the bank’s forecast for future growth.

The bank had predicted growth in the last three months of 2101 would average 2.6%, but few analysts think that number is reachable at this point.