"Weighing these considerations, the bank judges that the substantial monetary policy stimulus currently in place remains appropriate and therefore has decided to maintain the target for the overnight rate at 1 percent"
- Stephen Poloz, Bank of Canada Governor
Canadian policymakers abandoned an 18-month streak of rate-hike talk in a policy shift, saying the economy is facing slower-than-expected growth and risks of persistently weak inflationary pressure. The Bank of Canada left its key refinancing rate at 1%, citing the economy is facing global and domestic impediments to growth, including uncertainty in the United States. Since September 2010 the nation's central bank refrained from any additional stimulus, relying on previous adjustments.
The central bankers also slashed its economic outlook for the economy, estimating modest economic expansion this year. The growth rate for this year was cut by 0.2% to 1.6%, while it is expected to accelerate during the next two years, expanding 2.3% and 2.6% in 2014 and 2015, respectively. Furthermore, the end of 2015 is a key to the country as it is the deadline, when it should return to its full production capacity.
Amid domestic impediments, the BoC mentioned sluggish exports and weak business investment. Additionally, the inflation is likely to stay below the 2% target in the short-term until late 2015. Meanwhile, BoC's analysts noted that they were disappointed with global growth, also citing latest government shutdown in the United States.
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