The more things change, the more they stay the same. Such is the word from the Bank of Canada, which announced this morning that it is maintaining its target for the overnight lending rate at 1%. The central bank rate is correspondingly 1.25% and the deposit rate is 3/4 of 1%
In a news release this morning, the central bank announced that the global economic outlook is slightly weaker than the bank had projected in its October Monetary Policy Report (MPR).
"At the same time, global tail risks have diminished. The economic expansion in the United States is continuing at a gradual pace, restrained by ongoing public and private deleveraging, global weakness and uncertainty related to fiscal negotiations. Despite a marked improvement in peripheral sovereign debt markets, Europe remains in recession, with a somewhat more protracted downturn now expected than in October."
In Canada, on the other hand, "the slowdown in the second half of 2012 was more pronounced than the bank had anticipated, owing to weaker business investment and exports. Caution about high debt levels has begun to restrain household spending. The Bank expects economic growth to pick up through 2013. Business investment and exports are projected to rebound as foreign demand strengthens, uncertainty diminishes and the temporary factors that have weighed on resource sector activity are unwound. "
Relative to the October MPR, said the release, "Canadian economic activity is expected to be more restrained. Following an estimated 1.9% in 2012, the economy is expected to grow by 2% in 2013 and 2.7% in 2014. The Bank now expects the economy to reach full capacity in the second half of 2014, later than anticipated in the October MPR."
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