"With continued slack in the Canadian economy, the muted outlook for inflation, and the constructive evolution of imbalances in the household sector, the considerable monetary policy stimulus currently in place will likely remain appropriate for a period of time"
-the Bank of Canada
During his monthly policy meeting as a Governor of the Bank of Canada Mark Carney kept the main interest rate unchanged and noticed that tighter policy may be needed soon as the economic expansion progresses. The benchmark interest rate on overnight loans between commercial banks remained at 1% for the 22nd consecutive meeting, in line with analysts' expectations. The central bank also said that annualized first-quarter economic growth probably exceeded its April forecast of 1.5%, while economists' see a 2.3% expansion.
It is also expected that Canadian economy will not reach its full capacity until mid-2015, keeping inflation below the 2% target until this time. Last month a report showed that consumer price pressure expanded at the slowest pace since the end of the last recession three years ago at 0.4%. During the last year consumer prices have lagged the central bank's 2% target level.
On June 1 Mark Carney will leave the nation's Central Bank and will be replaced by Stephen Poloz, who previously has led Canada's export– financing agency.
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