Bank of Canada maintains interest rate: Read the full statement

The Bank of Canada today announced that it is maintaining its target for that overnight rate at 1/2 percent. The financial institution Rates are correspondingly 3/4 percent and the deposit rate is 1/4 per cent.

The global economy is progressing largely because the Bank anticipated in the January Monetary Policy Report (MPR). Financial market volatility, reflecting heightened concerns about economic momentum, appears to be abating. Although downside risks remain, the Bank still expects global growth to strengthen this year and then. Recent data indicate the U.S. expansion remains broadly on the right track. At the same time, the low level of oil prices will continue to dampen development in Canada and other energy-producing countries.

Prices of oil and other commodities have rebounded in recent weeks. Within this context, as well as in light of shifting expectations for monetary policy in Canada and also the United States, the Canadian dollar has appreciated from its recent lows. With one of these movements, both cost of oil and the exchange rate have averaged near to levels assumed within the January MPR.

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Bank of Canada holds key interest rate

Canada’s GDP development in your fourth quarter was not as weak as expected, but the near-term outlook for that economy remains broadly the same as in January. National employment has organized despite job losses in resource-intensive regions, and household spending is constantly on the underpin domestic demand. Non-energy exports are gathering momentum, particularly in sectors which are sensitive to exchange rate movements. However, overall business investment remains very weak because of retrenchment within the resource sector.

Inflation in Canada is beginning to change broadly as anticipated. The standards that pushed total CPI inflation as much as 2 per cent will probably unwind in the months ahead. Measures of core inflation are at or just below 2 percent, boosted by the temporary results of past exchange rate depreciation. Material excess capacity within the Canadian economy will continue to dampen inflation.

An assessment of the impact from the upcoming federal budget’s fiscal measures will be integrated into the Bank’s April projection. All things considered, the risks to the profile for inflation are roughly balanced. Meanwhile, financial vulnerabilities continue to edge higher, in part because of regional shifts in activity linked to the structural adjustment underway in Canada’s economy. The Bank’s Governing Council judges that the overall balance of risks remains inside the zone that the present stance of economic policy is suitable, and the target for the overnight rate remains at 1/2 percent.