Canada Monetary Policy


Central Bank stays pat on interest rates

At its meeting held on 31 May, the Bank of Canada (BoC) left the target for the overnight rate unchanged at 1.00%, in a move widely anticipated by the market. With this decision, policymakers have opted for no change in rates for six consecutive meetings. The Bank stated that any reduction in monetary stimulus would require careful consideration, hence signalling no intent of hiking rates in the near future. According to the Bank of Canada, the global outlook remains solid, with the U.S. economy growing moderately in the first quarter, although sovereign debt problems continue to plague the Eurozone periphery placing a drag on economic momentum. Regarding the domestic state of affairs, the Bank stated that it expects inflation to converge to the 2.0% target by the middle of 2012 as ?excess supply in the economy is gradually absorbed, labour compensation growth stays modest, productivity recovers and inflation expectations remain well-anchored.? The next policy meeting is scheduled for 19 July.


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