The Bank of Canada toned down its stance on future interest rate increases on Wednesday when it kept its key rate on hold at 1.75 per cent.

The central bank cited a “sharper and more broadly based” slowdown in the Canadian economy and a “more pronounced and widespread” global economic downturn than it expected, and said there is increased uncertainty on the timing of future hikes.  

Below, economists react to the central bank’s outlook and weigh in on what the future path for rates might be.

“The Bank of Canada has seen too much of a not good thing as Canada's growth slowed to a crawl, and that's hardly the time to raise rates or even talk much about doing so. Today's no change announcement was therefore no surprise.”

Avery Shenfeld, chief economist, CIBC Capital Markets

“The core message today appears to be that the economy requires more stimulus than previously thought. Gone are references to achieving neutral, instead we are told ‘the outlook continues to warrant a policy interest rate that is below its neutral range.’”

Brian DePratto, senior economist, TD Economics

“Following the lead of most of the world’s central bankers, the Bank of Canada continued to take a more dovish tone. It’s clear that while the hiking bias was left in, any potential move higher in rates is a long time away. Indeed, any further deterioration in the backdrop will prompt discussion of rate cuts to heat up further.”

Benjamin Reitzes, Canadian rates and macro strategist, BMO Capital Markets  

“The Bank of Canada has finally pulled its head out of the sand and acknowledged that the deteriorating economy no longer justifies higher interest rates in the near term. Although the Bank still expects its next move to be a rate rise, we think that it will end up cutting rates by the end of the year." 

Stephen Brow, senior Canada economist, Capital Economics