The Bank of Canada announced Wednesday it is holding its target for the overnight rate steady at 1.75 per cent.

This comes after it also held rates steady in December 2018.

“As expected, the Bank of Canada kept the overnight rate unchanged at 1.75 per cent and there wasn’t a big surprise in the message,” said Randall Malcolm, senior managing director at Sun Life Investment Management, in a statement. “Also unsurprisingly, oil was the main focus in both the statement and monetary policy report.”

In a press conference, Bank of Canada governor Stephen Poloz highlighted some challenges that have developed since the bank’s last monetary policy report in October. “Global financial markets have reacted — bond yields have fallen, yield curves have flattened even more and stock markets have repriced significantly,” he said in his opening remarks. “Here in Canada, lower oil prices have reached the point where they will have material consequences for our macroeconomic outlook. And our housing sector is taking longer than expected to stabilize.”

The Bank of Canada also projected real GDP will grow by 1.7 per cent in 2019, 0.4 percentage points slower than its October outlook. “This revised forecast reflects a temporary slowing in the fourth quarter of 2018 and the first quarter of 2019,” said a Bank of Canada press release. “This will open up a modest amount of excess capacity, primarily in oil-producing regions. Nevertheless, indicators of demand should start to show renewed momentum in early 2019, leading to above-potential growth of 2.1 per cent in 2020.”

The Bank of Canada is scheduled to make its next overnight rate target announcement on March 6, 2019.

“The appropriate pace of rate increases will depend on how the outlook evolves, with a particular focus on developments in oil markets, the Canadian housing market and global trade policy,” said Poloz.