Bank of Canada Governor Stephen Poloz waves as he waits to appear at the Commons finance committee on Parliament Hill in Ottawa, ON Tuesday November 4, 2014. THE CANADIAN PRESS/Adrian Wyld |
The looming threat of sliding oil prices forced the Bank of Canada to drop its trend-setting interest rate Wednesday, a surprising move that shows just how much the country's economic outlook has soured in a matter of months.
The central bank, which nudged its key rate down to 0.75 per cent from one per cent, said the rapid oil-price collapse has created many unknowns around economic growth in the oil-exporting nation.
Until the effects of oil's late-2014 tailspin started to trickle through, Canada appeared to be on the cusp of a promising post-recession rebound — and inching closer to a rate hike.
"The drop in oil prices is unambiguously negative for the Canadian economy," governor Stephen Poloz said.
"Canada's income from oil exports will be reduced, and investment and employment in the energy sector are already being cut."