Bank of Canada Left Overnight Interest Rate Target at 0.75%

May 27, 2015

The fourth of eight scheduled monetary policy meetings decided the present policy stance is still appropriate but observed that higher oil prices and a softer U.S. dollar in recent weeks, noting that “if these developments are sustained, their net effect will need to be assessed as more data become available in the months ahead.”  The next scheduled meeting on July 15 will coincide with a full update of the outlook for the economy and inflation.  Officials note that inflation has been affected by some transitory factors but considers the underlying trend to be 1.6-1.8%.  Canada still has “highly stimulative” financial conditions, and projects stronger growth in the second quarter than the first one.  A 25-basis point rate cut in January had been the first change since hikes of 25 basis points each in June, July and September of 2010.  The message one infers from the second, third, and now fourth meetings of 2015 is that January’s cut is not meant to be the first in a series of reductions.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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