- BMO
The Bank of Canada kept its benchmark interest rate on hold as it awaits for Ottawa's forthcoming spending plans to stimulate the nation's economy before taking any further steps. The central bank maintained the target for the overnight rate steady at 0.5%, noting that the near-term economic outlook remains virtually unchanged from January. The BoC said that while stubbornly low oil prices continue to derail the Canadian economy, it noted that inflation appeared on track and that 2015 closed out with better than estimated growth. Canada's GDP increased an annualized 0.8% in the final quarter of 2015, while for the whole year the nation's economy grew 1.2%. The central bank expects that economic output will increase 1% in the first quarter of the year. However, financial vulnerabilities have increased and the commodity-price decline has left overall business investment very weak. Canada's Liberal government is due to announce its federal budget on March 22, pledging during an election campaign to spend as much as 10 billion Canadian dollars during each of the next two fiscal years.
A recent commodity-price rebound, coupled with shifting expectations for Canada's and US monetary policy, have caused Canada's currency to strengthen versus the US Dollar. The BoC welcomed the recent pick-up, as it returned the exchange rate to previous estimates assumed in January.
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