The Bank of Canada announced Wednesday that it kept its benchmark interest rate steady at 1.75 percent as it digested the impact of its previous policy decisions and effect of drastically lower oil prices on the Canadian economy.

The Canadian central bank said more monetary tightening will be needed to help meet its 2.0 percent inflation target, saying that the timing of future hikes will depend on factors such as the effect of higher interest rates on consumption and housing and global trade policy developments.

The bank raised its benchmark rate, known as the target for the overnight rate, to 1.75 percent level in October, the fifth time since July 2017 that it decided to hike.

It said it will keep a close eye on the evolution of several recent developments as it considers the timing of its next rate hike, including a steep slide in oil prices that it predicts will reduce activity in Canada's energy sector.

The Alberta provincial government in the country has implemented an emergency cut to production levels to boost prices.

"In light of these developments and associated cutbacks in production, activity in Canada's energy sector will likely be materially weaker than expected," the bank said.

The bank also said recent data show that the economy has less momentum heading into the final quarter of 2018 related to factors such as a drop in business investment that the bank largely connects to trade uncertainty last summer.

The bank added that it will be watching for positive developments such as signs the economy can still grow without stoking inflation.

The bank's overnight interest rate stays at 1.75 percent, still well below the "neutral" rate of 2.5-3.5 percent.

The Canadian dollar plunged more than half a cent Wednesday morning when the bank announced its decision, dipping below 0.75 U.S. level to its lowest level since May 2017.