Here's what the Bank of Canada was thinking when it held rates this month

financialpost.com:

The Bank of Canada held its key overnight rate at five per cent on Dec. 6, a move that was widely expected by economists and markets. On Dec. 20, the central bank released a summary of the deliberations that led to that monetary policy decision. Here are five things the governing council said affected the decision:

The bank said recent global economic developments were top of mind in its decision to hold rates earlier this month. It said the U.S. economy’s stronger-than-expected performance in October had been offset by weakness in the rest of the world, and that inflation was easing in most major economies. “As global growth slowed in recent months, inflation eased further,” the central bank said. Lower energy prices and declines in food and core goods inflation contributed to a drop in overall year-over-year inflation in the U.S. and the euro area. That altered market expectations for central bank policy, making them less inclined to raise rates this month.

Data for the third quarter showed economic growth had contracted at a rate of 1.1 per cent, after expanding at a rate of 1.4 per cent in the second quarter, the bank said. Higher interest rates continued to restrain consumer spending and consumption fell flat over the second and third quarters. Meanwhile, final domestic demand grew by 1.3 per cent in each of the last two quarters as a result of positive growth in government spending and residential construction. The increase in new home construction largely helped housing activity to rise by 8.3 per cent in the third quarter. The bank said that while this spending on new construction was encouraging to see, it would need to be a significant and sustained to resolve the long-standing structural shortage in supply.