For the second time, the Bank of Canada is keeping its interest rate at 2.75%.
Wednesday's announcement wasn't a surprise to many, including Adam Pukalo, a Commodities Futures Advisor with Ventum Financial based in Winnipeg.
"That's what the majority of analysts were looking for, is just rates to be kept the same," said Pukalo, noting the Central Bank's reasons for maintaining the interest rate were steady inflation and job numbers, the economy performing in the first quarter of year better than expected, and unknown impacts tariffs would have on the Canadian economy,
Wednesday also marked the doubling of tariffs on Canadian steel and aluminum going into the United States to 50%.
The Bank of Canada is expecting the economy to weaken later in the year as consumer and business spending tightens up and tariff impacts start to show in economic data.
Bank of Canada Governor Tiff Macklem says there could be more interest rate cuts in the future, if the economy starts to weaken and price pressure remains under control.
From an investment point-of-view, and using GIC's as an example, Pukalo said some people are choosing not to lock their money at a rate of three per cent or less and are looking elsewhere for a better return.
"Before, you could put in your money at 5% and have virtually zero risk in a low-risk GIC type investment. However, now that GICs are maturing, a lot of clients and others that I've been talking to are not wanting to lock in their money at 3% or less, which a lot of financial institutions are offering now, so that's where there's other alternatives that I'm looking at for clients that still offer that low to medium risk but can target that 5% return that many are looking for. That's kind of one thing that I've been discussing with a lot of farms, individuals, and business owners recently."
The Bank of Canada will make its next interest rate announcement on July 30, and will release its monetary policy report the same day.
