Canada: Bank of Canada maintains overnight rate in March
March 6, 2013
At its 6 March monetary policy meeting, the Bank of Canada (BoC) left the target for the overnight rate unchanged at 1.00%, in a decision widely expected by market analysts. Monetary authorities have left rates unchanged since September 2010.
The Central Bank stated that the economic expansion in the United States is "continuing at a gradual pace" and that Europe remains in recession. On the Canadian economy, the Bank said that it expects growth to pick up in 2013, supported by household spending and a recovery in exports and investment. Regarding household credit, the Bank expects the debt-to-income ratio to stabilize around its current levels.
Regarding price developments, the Central Bank stated that inflation is "expected to remain low in the near term before rising gradually to reach 2 per cent", which is the Bank's mid-point of its target of 2.0% plus/minus 1.0 percentage points. Against this backdrop, the Bank maintained a slightly tightening bias, stating that "the considerable monetary policy stimulus currently in place will likely remain appropriate for a period of time, after which some modest withdrawal will likely be required".
FocusEconomics Consensus Forecast panellists see the policy rate at 1.13% by the end of 2013. For 2014, panellists expect the policy rate to rise to 1.92%.