Canada: Central Bank leaves interest rates unchanged
July 19, 2011
At its meeting held on 19 July, 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 keep rates on hold over the last seven meetings. Although the Central Bank stated that any reduction in monetary stimulus would require careful consideration, policymakers indicated that the stimulus will be ?withdrawn? rather than ?eventually withdrawn?, which was the case in the previous press release. The subtle modification signals a hike in rates should be expected sooner rather than later. The Bank of Canada estimates that the economy gathered further momentum in the second quarter, supported by strong business investment, and expects economic growth to accelerate in the second half of the year. In addition, monetary authorities expect inflationary pressures to gradually abate and converge to the 2.0% target by the middle of 2012.