TORONTO, May 26, 2011 /CNW/ - The C.D. Howe Institute's Monetary Policy Council (MPC) today recommended that the Bank of Canada raise its target for
the overnight interest rate, the very short-term money-market rate the
Bank targets for monetary policy purposes, to 1.25 percent at its next
announcement on May 31, 2011. The Council further recommended raising
the target rate to 1.50 percent at the following announcement on July
19, 2011, followed by increases that would take it to 1.75 percent in
December 2011 and 2.25 percent in May 2012.
The MPC is a panel sponsored by the C.D. Howe Institute to provide an
independent assessment of the monetary stance most appropriate for the
Bank of Canada as it seeks to achieve its 2 percent inflation target. William Robson, the Institute's President and CEO, chairs the Council.
The MPC's formal recommendations for each announcement date are its
median votes. The recommendation for May 31 reflected a split between 7
members urging an increase to 1.25 percent and 5 urging no change.
Differences in members' assessments of the outlook for growth and
inflation, and in the balance of risks affecting each, showed clearly
at the 12-month horizon, with 7 members looking for an overnight rate
of 2.00-2.25 percent in May 2012, and 5 looking for a rate in the range
between 2.75 and 3.25 percent.
For the full recommendation go to: www.cdhowe.org.
SOURCE C.D. Howe Institute
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