|09-04-2014, 01:07 AM||#1|
Bank of Canada keeps rate unchanged as economy still struggling
As already projected by the market the Bank of Canada kept its rate unchanged but also the bank’s governor; Stephen Poloz, extended the country’s interest-rate pause to four years today and actually remained neutral on his next move as the economy remains on struggling to fully recover.
The central bank kept its benchmark rate on overnight loans between commercial banks at 1%, the same it has been since September 2010, meeting estimates by Bloomberg.
Keeping in mind that the rate has been a one per cent for more than four years, dating back to September 2010, the longest stretch of level rates in Canadian history.
If truth be told completing an economic recovery in two years “is reliant on continued stimulative monetary policy and hinges critically on stronger exports and business investment,” policy makers led by Poloz, 58, said in a statement from Ottawa today.
Also the bank added regarding its neutrality that: “The Bank is neutral with respect to the timing and direction of the next change to the policy rate, which will depend on how new information influences the outlook and assessment of risks”
Furthermore it is important to be aware that a reason why the Bank is planning o keep its rate unchanged on a long term is inflation, knowing that the country’s price pressures slowed slowed to 2.1 percent in July from 2.4 percent in June, after accelerating from 0.7 percent in October.
In fact the rise in the inflation rate was mainly triggered by a temporary increase in energy prices and the effect of a weaker currency, and not “any change in domestic economic fundamentals,” the bank said today.
Otherwise on the global economy, the central bank said that “a solid recovery seems to be back on track” in the U.S., while “the recovery in Europe appears to be faltering as the situation in Ukraine weighs on confidence.”
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