Canada Monetary Policy


Bank of Canada keeps policy rate unchanged, as expected

At its 4 September monetary policy meeting, the Bank of Canada (BoC) left the target for the overnight rate unchanged at 1.00%, a decision that was in line with market expectations. Monetary authorities have left rates unchanged since September 2010.

According to the Central Bank, GDP levels are consistent with recent forecasts. Moreover, despite uncertainty regarding the global economy and a delay in an "anticipated rotation" towards export-led growth, the BoC still expects the output gap to, "begin to narrow in 2014." In terms of price developments, the BoC continues to see inflation as "subdued" and expects that CPI will, "return slowly to 2 per cent as the output gap closes," which is on par with the Bank's target of 2.0% plus/minus 1.0 percentage points. The Bank concluded by reiterating previous statements 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 panelists see the policy rate at 1.01% at the end of 2013. For 2014, panelists expect the policy rate to rise to 1.52%.

Author:, Economist

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Canada Monetary Policy Chart

Canada Monetary Policy September 2013

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

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