The Bank of Canada announced this morning that the overnight rate has remained unchanged. The rate has been sitting at 1.75% for the last 12 consecutive months.

When the Bank released it’s monetary report in July the financial outlook for the country was weak. In this month’s monetary report the outlook is even weaker. Seemingly endless global trade conflicts are still weighing on the Canadian economy and driving down global growth. In fact, the Bank reported that “a growing number of countries have responded with monetary and other policy measures to support their economies.” The Bank of Canada’s choice to stand pat is contrary to what many of its international peers are doing. In fact, since the Federal Reserve decreased it’s rate to 1.5% today, Canada now has the highest overnight rate in the industrialized world.

The Bank justified keeping the rate as it is by stating that “government spending and lower borrowing rates are supporting domestic demand, and activity in the services sector remains robust.” The Bank continued the justification by stating that employment remains strong and wages are growing. However, speculators expect that as an outlier the Bank will face pressure to decrease its rates in the coming months. Lower rates would be good news for homeowners with variable rate mortgages. The next announcement for the overnight rate is on December 4th this year.

The Bank seems to be looking to the future with an eye of uncertainty. Rather than estimating the country’s short-term growth it is focused its capacity to withstand ongoing complications. “Governing Council is mindful that the resilience of Canada’s economy will be increasingly tested as trade conflicts and uncertainty persist. In considering the appropriate path for monetary policy, the Bank will be monitoring the extent to which the global slowdown spreads beyond manufacturing and investment.”

Going forward the Bank will keep it’s eye on consumer spending and the housing markets, as well as any fiscal support promised by the recently re-elected federal government during their campaign. Government support would ease the Bank’s need to lower rates in the coming months, a positive prospect given the speculation that lower borrowing rates could risk increasing Canada’s near-record levels of household debt.

As for housing, the Bank reported that “activity is picking up in most markets. The Bank continues to monitor the evolution of financial vulnerabilities in light of lower mortgage rates and past changes to housing market policies.”