In making the scheduled announcement Wednesday, the central bank said its decision also came as the economic environments in Canada and overseas had largely moved forward in line with its expectations. While both Canadian and USA economies rebounded in the third quarter as inflation continues to lag, the labour market is one of the most noticeable areas of divergent performances. It repeated its prediction that Canada would see "more-moderate growth" over the final three months of 2016. All signs point to the U.S. Federal Reserve raising rates next week. At the same time, expectations the USA will engage in heavy fiscal stimulus has somewhat brightened the economic outlook for Canada. He said it was too soon for the central bank to factor president-elect Donald Trump's election win into its decision making.
The bank also said Canada saw gains in employment, but that considerable economic slack remained present when compared to the United States.
Business investment and non-energy goods exports continue to disappoint. Douglas Porter, chief economist for BMO Financial Group, doesn't think so.
Still, with the policy rate at 0.50 percent, the Bank of Canada may be running out of room to cut interest rates.
The gains came even as prices for oil, a major Canadian export, slid on bearish USA petroleum inventory data and doubts that production cuts promised by OPEC and Russian Federation would be deep enough to end a supply overhang that has weighed on markets for more than two years.
The language of the policy statement was largely neutral and indicated that the current stance of monetary policy remains appropiate as CPI inflation has picked up and as the dynamics of growth are consistent with what the Bank had anticipated.
According to the bank, the increase in household imbalances will be mitigated over time by changes to housing-finance rules.
The decision was in line with expectations with all major banks expecting rates to be left unchanged at this meeting. The next scheduled event for the bank will be new economic projections scheduled for January 17.
In October, the bank downgraded its growth outlook and governor Stephen Poloz said its governing council actively discussed cutting the trendsetting rate before deciding to keep it on hold.
The Bank of Canada noted that consumption growth in Canada was strong during the third quarter, which it attributed in part to an expanded tax benefit for families with children.
In October the BOC lowered its forecast for Canada's Gross Domestic Product to grow by 1.1 percent this year, down from 1.3 percent forecast in July, and to 2.0 percent in 2017, down from 2.2 percent.