OTTAWA, Sept. 10 /CNW Telbec/ - The Bank of Canada today announced that
it is maintaining its target for the overnight rate at 1/4 per cent. The Bank
Rate is unchanged at 1/2 per cent and the deposit rate is 1/4 per cent.
Global economic and financial developments have been broadly in line with
the Bank's expectations. Following a deep, synchronous recession, recent
indicators point to the start of recovery in major economies, supported by
aggressive policy stimulus and the stabilization of global financial markets.
In Canada, economic growth, the output gap, and inflation in the first half of
2009 have evolved largely as expected in the Bank's July Monetary Policy
Stimulative monetary and fiscal policies, improved financial conditions,
firmer commodity prices, and a rebound in business and consumer confidence are
supporting domestic demand growth in Canada. Combined with recent information
on inventory adjustments and automotive production, this suggests that GDP
growth in the second half of 2009 could be stronger than the Bank projected in
July. Total CPI inflation is still expected to trough in the current quarter
before returning to the 2 per cent target in the second quarter of 2011 as
aggregate supply and demand return to balance.
Conditional on the outlook for inflation, the target overnight rate can
be expected to remain at its current level until the end of the second quarter
of 2010 in order to achieve the inflation target.
While the underlying macroeconomic risks to the projection are roughly
balanced, the Bank judges that, as a consequence of operating at the effective
lower bound, the overall risks to its inflation projection are tilted slightly
to the downside.
Persistent strength in the Canadian dollar remains a risk to growth and
to the return of inflation to target. In its conduct of monetary policy at low
interest rates, the Bank retains considerable flexibility, consistent with the
framework outlined in the April MPR.
The next scheduled date for announcing the overnight rate target is 20
October 2009. A full update of the Bank's outlook for the economy and
inflation, including risks to the projection, will be published in the MPR on
22 October 2009.
For further information:
For further information: Jeremy Harrison, (613) 782-8782