Canada Monetary Policy


Bank of Canada holds policy rate steady in July

At its 17 July monetary policy meeting, the Bank of Canada (BoC) left the target for the overnight rate unchanged at 1.00%, a decision widely expected by the market. Monetary authorities have left rates unchanged since September 2010. This was the first interest rate decision by Governor Stephen S. Poloz, who replaced Mark Carney in June.

According to the Central Bank, global economic activity has been characterized by modest growth in the United States and recession in the Euro area, as well as by economic recovery in Japan as a result of the massive policy stimulus implemented by the country's policymakers. The BoC expects economic growth, "to be choppy in the near term." However, it believes that exports will gather pace and that consumer spending will support the economy going forward.

The BoC sees that inflation will, "remain subdued in the near term," and, "return to 2 per cent around mid-2015," which is the mid-point of the Bank's target of 2.0% plus/minus 1.0 percentage points. The Bank concluded that "the considerable monetary policy stimulus currently in place will remain appropriate," and that, over time, "a gradual normalization of policy rates can also be expected."

FocusEconomics Consensus Forecast panellists see the policy rate at 1.01% at the end of 2013. For 2014, panellists expect the policy rate to rise to 1.52%.


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Canada Monetary Policy Chart

Canada Monetary Policy July 2013

Note: Target for the Overnight Rate in %.
Source: Bank of Canada (BoC).

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