The Bank of Canada (BoC) left its benchmark interest rates unchanged at 1.75 percent on Wednesday, as widely expected.

In its policy statement, the Canadian central bank said that the current degree of monetary policy stimulus remains appropriate. According to the BoC, the Governing Council will pay particular attention to global developments and their impact on the outlook for Canadian growth and inflation as escalating trade conflicts and related uncertainty are taking a toll on the global and Canadian economies. It also added that Canada’s economy is operating close to potential and inflation is on target. The country’s growth in the second quarter was strong and exceeded the Bank’s July expectation, although some of this strength is expected to be temporary, driven by a recovery in energy production and export growth. Meanwhile, housing activity has regained strength more quickly than expected as resales and housing starts catch up to underlying demand, supported by lower mortgage rates. Wages have picked up further, yet consumption spending was unexpectedly soft in the quarter. Business investment contracted sharply after a strong first quarter, amid heightened trade uncertainty. Given this composition of growth, the BoC expects economic activity to slow in the second half of the year.

In regard to price pressure, the Canadian central bank noted that inflation was at the 2 percent target. CPI inflation in July was stronger than expected, largely because of temporary factors. Measures of core inflation all remain around 2 percent.