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Bank of Canada keeping target interest rate at one per cent

Published by Stephanie Brooks on July 17, 2012

Governor Mark Carney today announced the Bank is maintaining its target for the overnight rate at one per cent. The bank rate, correspondingly, is 1 1/4 per cent and the deposit rate is 3/4 per cent.

Economic growth in the US continues at a slow but gradual pace, while developments in Europe show a contraction. In China and other emerging economies, the deceleration has been greater than anticipated, reflecting past policy tightening and weaker external demand. This slowdown has led to a reduction in commodity prices, although they remain elevated.

As global financial conditions continue to deteriorate, with periods of volatility, the Bank's base projection finds the European crisis will continue to be contained. The growing global excess capacity and reduced commodity prices means moderate global inflation.

While international situations are restraining Canadian economic activity, domestic factors are expected to support moderate growth here at home. The Bank expects the economy to grow by 2.1 per cent in 2012, 2.3 per cent in 2013, and 2.5 per cent in 2014. Consumption and business investment are expected to be the main drivers of growth.

 

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