OTTAWA, March 18 (Xinhua) -- The Bank of Canada on Wednesday announced that it will maintain its target for the policy rate at 2.25 percent, amid heightened global economic risks stemming from the conflict in the Middle East.
The central bank said in a press release that the conflict has increased volatility in global energy prices and financial markets. While global economic growth had been on track before the conflict, the sharp rise in oil and natural gas prices, combined with transportation bottlenecks in the Strait of Hormuz, is expected to boost global inflation in the near term, it said.
On the domestic front, the bank noted that Canada's GDP contracted by 0.6 percent in the fourth quarter of last year, while the unemployment rate rose to 6.7 percent in February.
Although the Consumer Price Index eased to 1.8 percent in February, the bank warned that rising energy costs will likely push total inflation back up in the coming months.
The Bank of Canada said it will continue to closely monitor the unfolding conflict in the Middle East and the impact of U.S. tariffs and trade policy uncertainty on the Canadian economy.
