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Bank of Canada keeps interest rate at 1.5 percent
Last Updated: 2018-09-06 16:51 | Xinhua
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The Bank of Canada announced Wednesday that its interest rate will remain at 1.5 percent, where it has been since July 11 in spite of unexpectedly good economic conditions this summer.

The news came as the central bank is watching the fallout from the country's trade showdown with the United States.

The bank is monitoring closely the course of the North American Free Trade Agreement (NAFTA) negotiations and other trade policy developments, and the impact on the inflation outlook, the bank said in a statement.

It added that "elevated trade tensions" remain a key risk to the global economy and are already depressing some commodity prices.

Canadian and U.S. negotiators resumed talks in Washington Wednesday aimed at renegotiating NAFTA. The two sides are deadlocked on key issues, including U.S. demands to open up Canada's dairy market and Canada's insistence on retaining an independent dispute settlement system.

The bank acknowledges that economic conditions are ripe for more rate hikes, in spite of the trade uncertainty. It has raised its interest rates four times since mid-2017.

Recent economic data reinforce its view that higher rates will be needed to keep inflation near the bank's 2 percent target, said the bank.

The bank pointed out that both inflation and growth will slow a bit in the months ahead, saying in spite of July's spike in prices, its core measures of inflation remain near 2 per cent and wage growth is moderate.

The bank added that it expects economic growth to slow temporarily in the third quarter due to "fluctuations" in energy production and exports.

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