By Kim Mackrael 

OTTAWA -- The Bank of Canada is widely expected to keep its benchmark overnight interest rate unchanged this week with policy makers signaling no immediate intent to ease policy despite broad-based weakness in the fourth quarter.

Economists from all 11 primary dealers of Canadian government securities told The Wall Street Journal they anticipate the Bank of Canada will keep its benchmark overnight interest rate at 1.75% at a scheduled announcement on Wednesday.

CIBC World Markets economist Avery Shenfeld said central bank officials are likely satisfied with a wait-and-see approach in the short term. With Canada's unemployment rate close to a multi-decade low, and inflation roughly in line with the central bank's 2% target, he said, "there's no urgency for them to cut interest rates until they see which way the economy tips from here."

Six of the economists surveyed said they expect the Bank of Canada to hold interest rates steady throughout 2020. Five economists -- among them, Mr. Shenfeld -- said they envisage the domestic economy softening further, likely prompting an interest rate cut in the spring.

Canada's central bank has kept interest rates on hold for more than a year, bucking a trend that saw many of its developed country peers introduce rate cuts to deal with a slowdown in the global economy. Bank of Canada Governor Stephen Poloz said last year the Canadian economy was demonstrating enough resilience for policy makers to keep interest rates steady.

That assessment could be tested in the coming months if recent domestic weakness persists. The Canadian economy contracted in October, indicators point to soft activity in November, and many economists now anticipate the country's gross domestic product will either stall or contract slightly in the fourth quarter.

The Canadian economy received a reprieve of sorts with jobs data for December that indicated the country added 35,200 net new jobs in the month, following a reduction of over 71,000 positions in the previous month. The unemployment rate fell to 5.6%, or near a four-decade low.

Mr. Poloz said earlier this month that recent economic data "have been mixed." Job creation has slowed, he acknowledged, but that was offset by a pickup in wages. "We will be watching the data carefully to see how much of the recent moderation persists," he said.

Economists at TD Bank said in a note to clients that some of the fourth-quarter slowdown was due to temporary factors, including a strike at Canada's largest railroad. But that doesn't mean the weaker data should be ignored entirely, they said.

"Unless we see a material pickup in growth in 2020, the facts on the ground will force [Mr.] Poloz's hand" in cutting the key rate, the TD economists said.

(END) Dow Jones Newswires

January 20, 2020 10:49 ET (15:49 GMT)