The Canadian economy remains resilient despite the global uncertainty caused by the trade war between the United States and China, a senior Bank of Canada official said Thursday.
In a speech to the Ottawa Board of Trade, deputy governor Timothy Lane said inflation in Canada remains on target and a strong job market points to sources of growth.
“It is because of this strength amid the turmoil that we say Canada is resilient, although not immune,” Lane said, according to a prepared text of his speech.
Lane made the comments a day after the Bank of Canada announced it would keep its key interest rate target on hold at 1.75%, where it has been set since October last year.
The Bank of Canada has stood out from many of its international peers who have moved to cut rates and loosen monetary policy in response to weakness in the global economy. The U.S. Federal Reserve has cut its rate three times this year.
However, Lane said there is no reason for the Bank of Canada to move in step with the U.S. Federal Reserve.
“On the contrary, the experience of the past decade shows that Canada and the United States have followed different roads, reflecting differences in our economic conditions,” he said.
Lane said the resilience in the economy here at home has allowed the central bank to chart its own course.
In making its rate decision Wednesday, the central bank said global recession concerns are waning; however, ongoing trade conflicts and related uncertainty are still weighing on the global economy and remain the biggest source of risk to its outlook.
Meanwhile, economic growth in Canada slowed in the third quarter to an annual pace of 1.3%, matching the forecast by the Bank of Canada in its monetary policy report in October, while inflation has remained close to the central bank’s target of 2%.
“Overall, the tone of developments in recent weeks gives us more confidence in the outlook for growth and inflation that we set out back in October,” Lane said.
The central bank noted business investment spending in Canada, which rose 2.6% in the third quarter, was stronger than expected.
“We were expecting investment to decline in the second half of this year, but instead we have seen solid growth. Moreover, data have been revised upward, revealing that investment earlier this year was higher than previously reported,” Lane said.