02 March 2011
Bank of Canada Interest Rate Announcment - March 1, 2011
As was widely anticipated, the Bank of Canada held its overnight rate at 1 per cent this morning. The statement released along with the decision noted an improved outlook for the Canadian economy but also referenced escalating geopolitical risk and the challenge presented to exports by a Canadian dollar that reached a three-year high of 1.03 this week.
On inflation, the Bank noted that, “although global inflationary pressures are rising, inflation in Canada has been consistent with the Bank’s expectations and underlying pressures affecting prices remain subdued reflecting considerable slack in the Canadian economy. “
The stronger than expected pace of economic growth may have alone been enough to push the Bank to raise rates at its April 12 meeting. However, the risk posed to the global economy by a still evolving situation in the Middle-East along with the anti-inflationary (and potentially growth-subduing) impact of the Loonie’s rise will likely see the Bank erring on the side of caution and therefore holding rates steady until the summer.
Copyright British Columbia Real Estate Association. Reprinted with permission.
