- Bank of Canada
In line with market's expectations, the Bank of Canada kept its overnight rate target at 1%, highlighting downside risks to Canada's inflation outlook from plunging oil prices and temporary benefits from weaker Canadian Dollar. Nevertheless, the BoC said that inflation rose more than expected over the past year, largely due to lower Loonie and some sector-specific factors. Underlying inflation has climbed, but remain below 2%, the central bank said. Officials saw signs of a broadening recovery in Canada's economy, which is benefitting from strengthening neighbour, the US, Canada's top trading partner. Robust exports translated into increased business investment and employment, pointing to a shift toward self-sustaining growth away from a consumer-led one. However, the central bank stressed that future global uncertainty is one of the biggest impediments to the Canadian growth.
The BoC Governor Stephen Poloz also indicated that interest rates will remain low until the excess capacity from Canada's economy is eliminated and inflation is brought in line with the 2% target. The central bank kept interest rates at a record low of 1% for more than four years. The Canadian Dollar strengthened after the BoC's announcement, touching C$1.1352 to the US Dollar.
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