Bank of Canada Maintains Status Quo
The Bank of Canada remains committed to the status quo as global headwinds continue to restrain economic activity. Yesterday the BOC announced it would maintain the current overnight at 1%, however, Mr. Carney did comment to say that, “Over time, some modest withdrawal of monetary policy stimulus will likely be required.”, which leads me to beleive that he is itching to increase rates. Mr. Carney cited:
- “Core inflation has been lower than expected in recent months…”
- “Total CPI inflation has fallen noticeably below the 2 per cent target…and is projected to return to target by the end of 2013, somewhat later than previously anticipated.”
- “Housing activity is expected to decline from historically high levels, while the household debt burden is expected to rise further before stabilizing by the end of the projection horizon.”
- “The timing and degree of any such withdrawal (in rate stimulus) will be weighed carefully against global and domestic developments, including the evolution of imbalances in the household sector.”
Prime rate has held steady at 3% for the past 25 months now and I susspect we’ll finish the year out with more of the same. The next announcement is December 4, 2012. Here is the full Bank of Canada decision for your review.
