RBA Governor Glenn Stevens has ruled out a rate hike before the end of March, saying it was too early to be making such a decision.
The bank has been on a near-term rate hike path for a few months, but this is the first time the bank has indicated that it might not be doing it at this time.
Stevens said the bank was confident that it would be able to meet its target for the year of 3 per cent this year, despite the global economic slowdown.
But he said the Bank of Canada’s policy-setting committee is “confident” it will not be able “to deliver a rate rise in March”.
The committee is tasked with ensuring that the economy continues to improve and inflation remains below its target.
While he said he did not know when the committee might be able come to a decision, Stevens said it was “very much possible that this committee will not reach a decision this month”.
“The committee’s mandate is to make policy decisions in a timely manner and in a way that maximises the economic benefits to the Canadian economy,” Stevens said.
“As we head into the last quarter of the year, we are confident that the committee will be able, as expected, to make a decision in March.”
Stevens also told reporters he was “not sure” when the Bank would begin to announce its decision on a rate increase, and said it would take a few days to fully evaluate what the committee’s thinking was.
There are currently three different models that the bank uses to evaluate its rates, one of which uses the Bank’s own forecasts, another of which the International Monetary Fund (IMF) uses, and the third uses a combination of those three.
In January, the bank began a process that could potentially lead to the next meeting of the policy-making committee, but the timing has not yet been determined.
A rate hike was announced in April, but was later delayed until June.
As well as raising rates, the RBA also released a revised plan to balance the budget and increase the retirement age, but it has been pushed back several months.
Earlier this month, the Bank also indicated it could consider a move that would increase the minimum wage to $10 an hour.
According to a Bloomberg report, Stevens had also been asked to consider moving to a new rate for the mortgage interest deduction.
On Wednesday, the finance minister, Joe Oliver, told reporters that the government would be considering any “unusual measures” it could take to help lower the unemployment rate.
Last month, Carney told a committee of senior officials that the central bank was “well-positioned” to raise rates and increase borrowing costs.
And, as reported earlier this month by the National Post, Stevens also said the RBC’s outlook for the economy was “more positive” than expected, and that the RBS and Bank of Montreal were “in line to do very well” in the coming months.