Bank of Canada Kept Overnight Rate Target at 1.0% as Expected

March 1, 2011

There had already been three increases of 25 basis points each but none more recently than last September 8th.  A statement released by Canadian monetary authorities observed that economic recovery had lately been “slightly faster than expected” and “early evidence of a recovery in net exports” had even surfaced.  The point is also made that “global inflationary pressures are rising,” but officials add that domestic inflation remains innocuous, with “subdued” underlying pressure because of the persistence of “considerable slack” in productive resources.  The January Monetary Policy Report projected Canadian GDP growth at 2.4% this year followed by 2.8% in 2012, and today’s statement notes that exports face continuing challenges from a strong Canadian dollar and poor relative productivity growth.  The final paragraph is the same as in the prior two statement, concluding dovishly that “any further reduction in monetary policy stimulus would need to be carefully considered.”  The third scheduled interest rate policy statement of 2011 is set for April 12, followed two days later by a quarterly Monetary Policy Report.

Copyright Larry Greenberg 2011.  All rights reserved.  No secondary distribution without express permission.



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