Time really just flies by â€“ for example just a little while ago we heard the decision from the Bank of Canada to hold the overnight rate at 1%. The reason for that decision was due to the outlook of global economic growth deteriorated from what was initially anticipated.
That said, the Bank of Canada has once again decided to maintain its target for the overnight rate at 1%. The Bank Rate will stand at 1.25% and the deposit rate will be 0.75%.
It has been at this 1% rate for almost 2 years â€“ see what I mean, time really just flies by right before your eyes.
What was the reason this time around?
The fact is, the decrease in the global economy has caused Canada economic activity to be restrained.
With that in mind, economic expansion in the US continues to move at a gradual pace, while in Europe, it points to a renewed contraction. Chine and other emerging economies deceleration in growth has been more than initially anticipated.
The Bank of Canada has projected that the economy will grow by 2.1% in 2012, 3.5% in 2013 and 2.5% in 2014. We can expect to see the economy reach its full capacity by the 2nd half of 2012.
The fact is, it is doubtful that we would see an increase in the overnight rate.
Without a doubt, it will rise at some point, however for now we have some more time before that does occur. The Bank of Canada stated that before they do increase it, they will need to carefully weigh in both domestic and global economic developments. Which tells us all we need to know.
The next scheduled meeting is on September 5th, 2012.
When do you think the overnight rate will increase?