BoC holds interest rate, warns of ‘significant uncertainties’

Economy’s improving trajectory could be affected

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OTTAWA — The Bank of Canada is holding its trendsetting interest rate at 0.5 per cent — but it’s keeping a watchful eye on “significant uncertainties” that it warns could alter the economy’s improving trajectory.

The central bank’s scheduled rate announcement comes as Canada tries to assess the direction of U.S. economic policy under President Donald Trump and the potential fallout from any changes he may bring.

The bank has said some U.S. proposals — which include tax cuts, a border tax and protectionist policies — would have material consequences for Canadian investment and exports.

In an unusually short statement, the Bank of Canada uses slightly stronger language when referring to U.S. uncertainties than it did in January.

The bank says improvements in recent data releases have been consistent with its projections and it expects fourth-quarter growth might have been slightly stronger than predicted.

However, on the downside, it says Canadian exports continue to face competitiveness challenges while the job market has seen weaker growth in wages and hours worked.

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