The Bank of Canada March 2019 rate statement

Bank of Canada holds rate steady, notes 'increased uncertainty' about future hikes

But it says the slowdown ended up being sharper and more broadly based than it had anticipated. A report showing weakening manufacturing on Wednesday magnified the worsening economic outlook.

The Canadian dollar swooned on the news, falling almost half a cent minutes following the bank's announcement.

The Canadian dollar dipped for sixth consecutive day and North American markets fell Thursday after global central banks continued convey a dovish tone about raising interest rates.

It's a mixed picture, and we need more time and more data to better understand what's going on.

Watch: The link between Canadian inflation and the interest rates you pay.

"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", Mr Brown said. Instead, growth slowed to 0.4 per cent.

The Bank of Canada began paring back optimism for the outlook at the end of a year ago, and in January added the words "over time" to its forward-looking statements to signal that while rates will eventually rise, officials are in no rush.

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TD Securities sees first-quarter growth near zero as others after the government last week reported fourth-quarter GDP advanced a mere 0.4 per cent, bolstered by rising inventories; the consensus forecast was for a 1.2 per cent increase.

That may force a response from the Bank of Canada, but analysts expect no major policy changes at the Wednesday meeting, which will not include the publication of a new economic forecast.

"Against this backdrop, I'd expect the hurdle rate to resume rate hikes to be quite high", said Sophia Drossos, a former economist at the U.S. Federal Reserve and Morgan Stanley, who now runs her own advisory firm in NY.

Looking ahead, however, Patterson said the Bank of Canada is optimistic that economic growth will build new momentum in the second half of 2019, thanks in large part to the still-strong employment conditions and improving wages. Consumption spending grew at the slowest pace in nearly four years, housing investment fell by the most in a decade, business spending dropped sharply for a second straight quarter, and domestic demand posted its largest decline since 2015.

The bank's policy decision and statement this week also came after governing council factored in the slowing global economy, which has been affected by trade tensions - particularly those between the United States and China - and other uncertainties, Patterson added. "It is hard to disentangle these confidence effects from other adverse factors, but it is clear that global economic prospects would be buoyed by the resolution of trade conflicts", said the bank.

The bank predicted inflation to stay slightly below its ideal two per cent target through most of the year.

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