Carney keeps trendsetting interest rate at 1 per cent, softens caution on future changes

OTTAWA – The Bank of Canada is keeping its trendsetting policy interest rate at one per cent for a while longer, and likely a whole lot longer.

The central bank said the Canadian economy continues to expand, but that housing activity is starting to decline and exports remain weak.

Still, the bank said growth will average 2.2 per cent this year, one-tenth more than it had projected in July.

Analysts had been expecting bank governor Mark Carney to soften his hawkish tone about future interest rate hikes and he obliged, saying modest withdrawal of stimulus will be required over time.

That suggests the time may be a long way off.

The bank also notes it will consider the health of the household sector in setting monetary policy, something it hasn’t done in previous interest rates announcements.