Bank of Canada Keeps Low Interest Rates

Author: Mikey G Ottawa

Canadians are almost certain to be enjoying the historically low interest rates for at least another 4 months now that the Bank of Canada has missed the opportunity to have a policy change today.

The central bank acknowledged during its scheduled policy rate announcement that the economy has improved, even to the point that exceeds their expectations, however it still needs the help of low interest rates in order to spur activity.

The Bank of Canada has once again warned that the high Canadian dollar contributes to hindering future economic growth.

The Bank of Canada has kept the trend setting rate of 0.25% for at least another month and a half, when it next pronounces on rates, which in all likelihood will be July.

Finance Minister Jim Flaherty is expected to say that Ottawa will continue with its plans of the second year of stimulus spending. The Bank of Canada noted that the economy may have improved from last year, however much of the improvement has come from actions made by governments and central bankers to prime the economic pump.

The Bank of Canada noted that the primary reason for growth is the vigorous domestic spending, however the export sector has been added to the list of factors.

Markets may have expected to see the Bank of Canada governor Mark Carney signal that he was preparing to tighten the monetary reins due to this; what we saw was the Bank of Canada suggest core inflation has been slightly firmer than projected.

It was made clear that some of the higher inflationary pressures due to transitory factors , adding that the outlook on prices had not materially changed since January.