"The Bank is neutral with respect to the timing and direction of the next change to the policy rate"
- Bank of Canada
Manufacturing sales in Canada advanced more than expected in May after falling to the negative territory last month, easing concerns over the country's economic prospects. Factory sales jumped seasonally adjusted 1.6%, overshooting expectations for a 1.3% rise. The gain was largely driven by higher sales in the petroleum and coal product and motor vehicle industries. Recently the Bank of Canada has published its Business Outlook Survey, according to which a positive sentiment prevails among the country's companies when it comes to their future sales growth, while being cautious about investment and hiring, which is slowing the pace of growth.
In the meantime, the Bank of Canada decided to keep its key overnight interest rate unchanged at 1% as projected, and said that the central bank now expects the country's economy to reach its full capacity about three months later than previously expected, around mid-2016, as soft U.S. and global growth curb demand for Canadian exports and hamper the domestic economy. The central bank revised quarterly headline and core inflation forecasts upwards through 2014 and said it now projects the inflation rate to stay around 2% over the coming two years. It also cut its 2014 and 2015 growth forecasts for the Canadian economy, to 2.2% and 2.4%, respectively.
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