Canada: Central Bank stays pat on interest rates for a fourth consecutive meeting
March 1, 2011
At its meeting held on 1 March, the Bank of Canada (BoC) left the target for the overnight rate unchanged at 1.00%, in a move widely anticipated by the market. The Bank stressed that there still exists ?considerable slack in the economy? with the output gap remaining negative. Simultaneously, the Central Bank expressed confidence regarding the ongoing global economic recovery, especially in the United States. On the other hand, sovereign debt uncertainty in some countries of the Eurozone still weighs on the recovery pace in Europe and increases the risk to the global economic outlook. Furthermore, policymakers remained confident about the recovery in Canada, stating that both household consumption and business investment remain strong. The BoC also commented on inflation, which it views as ?consistent with the Bank's expectations?. In general, the Central Bank maintained its dovish tone and did not signal a prospective hike in interest rates, which means a tightening of monetary policy is unlikely in the near future. The next policy meeting is scheduled for 12 April.