Investing.com – The Bank of Canada left its benchmark interest rate unchanged in July, it announced on Tuesday.
In a statement, the bank said it was leaving its overnight cash rate unchanged at 1.00%, broadly in line with expectations.
According to the BoC, the global economic recovery was proceeding broadly as expected in the bank’s April Monetary Policy Report, with modest growth in major advanced economies and robust expansions in emerging economies.
In Canada, the economic expansion was proceeding largely as projected. Household spending remains solid and business investment robust. Net exports remain weak, reflecting modest U.S. demand and ongoing competitiveness challenges, particularly the persistent strength of the Canadian dollar.
Following an anticipated slowdown in growth during the second quarter due to temporary supply chain disruptions and the impact of higher energy prices on consumption, the Bank expects growth in Canada to re-accelerate in the second half of 2011.
Overall, the Bank projects the economy will expand by 2.8% in 2011, 2.6% in 2012, and 2.1% in 2013.
Total CPI inflation was expected to remain above 3% in the near term, largely reflecting temporary factors such as significantly higher food and energy prices. Core inflation was slightly firmer than anticipated, owing to temporary factors and to more persistent strength in the prices of some services.
Total CPI inflation was expected to return to the 2% target by the middle of 2012 as temporary factors unwind, excess supply in the economy is gradually absorbed, labor compensation growth stays modest, productivity recovers, and inflation expectations remain well-anchored.
Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1%. To the extent that the expansion continues and the current material excess supply in the economy is gradually absorbed, some of the considerable monetary policy stimulus currently in place will be withdrawn, consistent with achieving the 2% inflation target.
Such reduction would need to be carefully considered.
Following the release of the data, the loonie was up against the U.S. dollar, with USD/CAD shedding 0.86% to hit 0.9515.
In a statement, the bank said it was leaving its overnight cash rate unchanged at 1.00%, broadly in line with expectations.
According to the BoC, the global economic recovery was proceeding broadly as expected in the bank’s April Monetary Policy Report, with modest growth in major advanced economies and robust expansions in emerging economies.
In Canada, the economic expansion was proceeding largely as projected. Household spending remains solid and business investment robust. Net exports remain weak, reflecting modest U.S. demand and ongoing competitiveness challenges, particularly the persistent strength of the Canadian dollar.
Following an anticipated slowdown in growth during the second quarter due to temporary supply chain disruptions and the impact of higher energy prices on consumption, the Bank expects growth in Canada to re-accelerate in the second half of 2011.
Overall, the Bank projects the economy will expand by 2.8% in 2011, 2.6% in 2012, and 2.1% in 2013.
Total CPI inflation was expected to remain above 3% in the near term, largely reflecting temporary factors such as significantly higher food and energy prices. Core inflation was slightly firmer than anticipated, owing to temporary factors and to more persistent strength in the prices of some services.
Total CPI inflation was expected to return to the 2% target by the middle of 2012 as temporary factors unwind, excess supply in the economy is gradually absorbed, labor compensation growth stays modest, productivity recovers, and inflation expectations remain well-anchored.
Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1%. To the extent that the expansion continues and the current material excess supply in the economy is gradually absorbed, some of the considerable monetary policy stimulus currently in place will be withdrawn, consistent with achieving the 2% inflation target.
Such reduction would need to be carefully considered.
Following the release of the data, the loonie was up against the U.S. dollar, with USD/CAD shedding 0.86% to hit 0.9515.