Canada: Bank of Canada leaves overnight rate unchanged in April
April 17, 2013
At its 17 April 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 the market. Monetary authorities have left rates unchanged since September 2010.
According to the Central Bank, global economic activity performance has been weak, with the economic expansion in the United States "continuing at a modest pace". On the Canadian economy, the Bank said that it expects the economy to "regain some momentum" this year, supported by consumer spending. Regarding household credit, the Bank expects the debt-to-income ratio to stabilize around its current levels.
Regarding price developments, the BoC stated that inflation is "expected to remain subdued in coming quarters before gradually rising to 2 per cent by mid-2015", 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%.