OTTAWA -- The Bank of Canada is sticking with its trendsetting interest rate of 0.5 per cent, saying uncertainties continue to overshadow the economy's stronger-than-expected start to the year.
In explaining its decision to hold the rate, the central bank is once again highlighting weak wage growth and the softening rate for underlying inflation as examples the economy still has room for improvement.
The bank's scheduled rate announcement comes after it raised its 2017 growth projection last month following a surprisingly healthy start to the year in areas such as employment, consumer spending and the housing markets.
But the bank says it expects the very strong growth over the first three months of the year to be followed by some moderation in the second quarter.
Analysts had widely predicted governor Stephen Poloz to keep the rate locked at its very low level of 0.5 per cent as significant uncertainties underlined by the bank in the past continue to swirl around the U.S. policy agenda on trade and taxation.
The bank also says while recent government policy measures on real estate have contributed to more sustainable outlooks for household debt, the rules have yet to have a substantial cooling effect on hot housing markets.
With no monetary policy report released Wednesday, observers will scrutinize the commentary in the bank's one-page statement for clues about its thinking on the trajectory of the economy.
