Canada Monetary Policy


Canada: Central Bank keeps key interest rate at 1.00%

September 7, 2011

At its 7 September monetary policy meeting, the Bank of Canada (BoC) left the target for the overnight rate unchanged at 1.00%, which was broadly expected by market analysts. With this decision, policymakers have opted to maintain rates over the last twelve months. The Central Bank stated that ?the need to withdraw monetary policy stimulus has diminished?, a statement supported in the context of slowing global economy, as well as the disappointing Canadian GDP print for the second quarter. The outlook has changed significantly since the last meeting held on 19 July, when policymakers stressed that the monetary stimulus will be withdrawn and some market analysts pondered over the possibility of the prospective tightening by the BoC. Nevertheless, the Bank expects that ?growth will resume in the second half of this year, led by business investment and household expenditures.? Furthermore, the Central Bank anticipates that inflation will continue to moderate as ?inflation expectations remain well-anchored? and will converge to the 2.0% target over the medium term.


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