The Bank of Canada maintained interest rates at their current levels, and said it expects economic activity to ease in the second half of 2019 as increasing global trade tensions weigh on the global and Canadian economies.
The central bank maintained its target for the overnight rate at 1.75% and held the bank rate and the deposit rate at 2% and 1.5%, respectively.
In its latest monetary policy guidance, the central bank cited increased trade tensions, global trade slowdown and weakening business investment as risks to the economy.
Increased concerns surrounding global growth prospects and policy responses by certain central banks have led to bond yields falling to record lows and inverted yield curves in certain economies, including Canada, the bank noted.
The bank said a rebound in growth in the second quarter was supported by improved export growth and energy production.
It also noted gains in wages, which resulted in higher labor income. However, it expects some of the strength in the second-quarter growth to be temporary and anticipates economic activity to slow in the second half of 2019.
Inflation stands at its 2% goal, while measures of core inflation also remain around 2%, the bank said. It cited increased prices for air travel, mobile phones and certain food items as factors behind higher-than-expected CPI inflation in July.
"As the bank works to update its projection in light of incoming data, [the] governing council will pay particular attention to global developments and their impact on the outlook for Canadian growth and inflation," the bank said.
