The Bank of Canada has not just stepped to the interest rate sidelines, it has pulled up a chair and taken a seat. The latest statement from the Bank gives every indication it intends to continue raising rates, but it is in, absolutely, no hurry to do so.
The key concern appears to be oil. The low price of crude is seen as a weight on the entire Canadian economy, although not as heavy a weight as in 2014 which led the Bank to actually cut rates in an effort to get things moving again. The situation with oil is part of a greater global uncertainty caused by trade tensions between the U.S. and China.
The Bank also cites a slowdown in Canada’s property market as an economic headwind. But, of course, that headwind is the natural and intended consequence of government intervention.
High household debt remains a serious worry for the BoC. It stands at nearly 178% after creeping slightly higher again in the third quarter of 2018. Most of that is mortgage debt and the Bank is keeping a close watch on how consumers are responding to rising rates.
By its own calculations the Bank figures 90% of the Canadian economy is working at capacity. That would seem to indicate the Bank will continue with its slow and cautious approach.