Bank of Canada Governor Mark Carney held his benchmark interest rate at 1 per cent Tuesday, pointing to global threats on both sides of the Atlantic and weaker-than-expected exports, while also signalling that the domestic economy’s strength is moving closer to higher rates.
In explaining the decision to leave borrowing costs alone for a seventh consecutive meeting, as expected, the central bank said that “widespread concerns” over sovereign debt problems have “increased risk aversion and volatility in financial markets.” However, Mr. Carney and his rate-setting panel said financial conditions in Canada “remain very stimulative” and the growth of private credit is strong despite global developments.
Moreover, in a teaser to a quarterly forecast they will release Wednesday, policy makers barely touched their growth projections for Canada from 2011 to 2013, and said their preferred gauge of inflation, which is approaching their 2 per cent target sooner than they had predicted, will hover around that level through 2013.
As a result, the central bank dropped a crucial word from the most important paragraph of its statement, indicating that its first rate hike since last September could come sooner than many economists and investors think.
From the Globe and Mail - July 19th
In explaining the decision to leave borrowing costs alone for a seventh consecutive meeting, as expected, the central bank said that “widespread concerns” over sovereign debt problems have “increased risk aversion and volatility in financial markets.” However, Mr. Carney and his rate-setting panel said financial conditions in Canada “remain very stimulative” and the growth of private credit is strong despite global developments.
Moreover, in a teaser to a quarterly forecast they will release Wednesday, policy makers barely touched their growth projections for Canada from 2011 to 2013, and said their preferred gauge of inflation, which is approaching their 2 per cent target sooner than they had predicted, will hover around that level through 2013.
As a result, the central bank dropped a crucial word from the most important paragraph of its statement, indicating that its first rate hike since last September could come sooner than many economists and investors think.
From the Globe and Mail - July 19th
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