Bank of Canada maintains overnight rate target at 1/4 per cent
The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1/4 per cent. The Bank Rate is unchanged at 1/2 per cent and the deposit rate is 1/4 per cent.
While significant fragilities remain, global economic developments have been slightly more positive and the global outlook has improved modestly relative to the Bank’s projection in its October Monetary Policy Report (MPR). Core inflation in recent months has been slightly higher than the Bank had projected, although total CPI inflation remains close to projections. The Bank continues to expect economic growth to become more solidly entrenched over the projection period and inflation to return to the 2 per cent target in the second half of 2011.
The risks to the outlook for inflation continue to be those outlined in the October MPR. On the upside, the main risks are stronger-than-projected global and domestic demand. On the downside, the main risks are a more protracted global recovery and persistent strength in the Canadian dollar that could act as a significant further drag on growth and put additional downward pressure on inflation. The Bank’s targeted inflation rate is 2.00%. The Bank judges the overall risks to its inflation projection are tilted slightly to the downside. Total CPI is currently at 0.10%.
The next scheduled date for announcing the overnight rate target is 19 January 2010.