The Bank of Canada made no change to the policy rate today and left it at 1.0% as was universally expected. Expectations were less unanimous on whether the Bank would maintain its bias statement which they did not. Rather today's statement highlighted that the persistently low inflation environment means that the risk of inflation remaining below the Bank's 2% target are taking "increasing importance" in the determination of the direction of policy.
Today's updated forecast showed real Gross Domestic Product growth at the lower end of this range with growth of 1.8% in the third quarter and 2.3% in the fourth quarter.
Previously, the Bank forecast growth of 3.8% and 2.5% over this period. On average, the economy is forecast to grow at a 1.6% pace in 2013, slower than the 1.8% estimate in the July MPR and 1.7% pace in 2012.
According to experts at RBC Economic Growth "today's (Monetary Policy Report) highlights the Bank's growing anxiety about the slow pickup in global demand for Canadian exports and supports the case for the current, highly stimulative monetary policy stance to remain in place.
"The downgrading of the economy's near-term growth trajectory," the bank concludes, "and the lengthening of the time period for the inflation rate to return to the 2% target tipped the scales away from a rate hike coming in 2014 with a more likely scenario being that interest rate increases will begin in 2015."
Related Stories
