Bank of Canada keeps benchmark rate at 0.5%

The Bank of Canada says its trend-setting interest rate will remain unchanged because the economy is adjusting as expected to the bite of low commodity prices and weaker-than-expected demand from the United States.

The central bank says Canadian inflation remains within its target range –the key determinant in its rate decisions.

As a result, the Bank of Canada left its benchmark rate at 0.5%.

The bank says the Canadian economy has grown largely in line with its October projections even as the country continues to adjust to the drop in its terms of trade.

It says the economy has received help from the lower Canadian dollar, the ongoing U.S. recovery and the Bank of Canada’s moves to cut rates twice this year.

The bank, however, also highlights economic challenges such as lower business investment in resource sectors and vulnerabilities in the housing sector that continue to creep higher in a prolonged era of rock-bottom interest rates.