Canada: Bank of Canada maintains overnight rate unchanged at December meeting
December 4, 2012
At its 4 December monetary policy meeting, the Bank of Canada (BoC) left the target for the overnight rate unchanged at 1.00%, a decision widely expected by market analysts. Monetary authorities have left rates unchanged since September 2010. The Central Bank stated that growth in the United States is hindered by uncertainty related to the fiscal cliff and that Europe remains mired in recession.
Moreover, the Bank added that inflationary pressures around the globe are subdued. On the Canadian economy, the Bank commented that "although underlying momentum appears slightly softer than previously anticipated, the pace of economic growth is expected to pick up through 2013".
Regarding price developments, the Bank stated that inflation is expected to return to the mid-point of its target of 2.0% plus/minus 1.0 percentage points in the next 12 months. Against this backdrop, the Central Bank maintained a slightly tightening bias, stating that "over time, some modest withdrawal of monetary policy stimulus will likely be required".