The Bank of Canada maintained interest rates at its record low 0.25 per cent on Tuesday, giving subtle signals that it is close to raising them, although not before July.
This keeps the commitment the central bank made last April to not change rates until at least the beginning of the third quarter of this year, conditional on the current outlook for inflation.
“The risks to the outlook for inflation continue to be those outlined in January,” the bank said in a statement.
“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 of the Canadian dollar. The Bank judges that the main macroeconomic risks to the inflation projection are roughly balanced.”
Following the release of the statement, the Canadian dollar went up by almost half a cent to 96.95 U.S. cents.
However, other market activity based on expectations on the interest rate was low, with analysts suggesting that the key policy rate may not rise for some time yet.
The Bank of Canada statement admitted that the economy had become stronger, with a much higher than expected 5 percent fourth-quarter growth, and core inflation rising to 2 percent this past January, but did not go as far as saying the economy had fully recovered.
“Core inflation has been slightly firmer than projected, the result of both transitory factors and the higher level of economic activity,” it reported.
The bank’s next update for the outlook of the economy is scheduled for April 22.
Friends Read Free