Canada's central bank keeps overnight rate target at 0.25 percent

07:57, April 21, 2010      

Email | Print | Subscribe | Comments | Forum 

The Bank of Canada, Canada's central bank, announced Tuesday that it has maintained its target for the overnight rate at 0.25 percent.

"Global economic growth has been somewhat stronger than projected, with momentum in emerging-market economies increasing noticeably," the bank said in a press release.

It also said that the recovery in the major advanced economies was still expected to be relatively subdued, since fiscal stimulus would be gradually withdrawn later this year and "considerable uncertainty remains about the durability of the global recovery."

Canada's economic recovery was proceeding somewhat more rapidly than the BOC had projected in its January Monetary Policy Report.

The central bank revised its projection that the economy would "grow by 3.7 percent in 2010 before slowing to 3.1 percent in 2011 and 1.9 percent in 2012."

The BOC also expected the economy to "return to full capacity in the second quarter of 2011."

Stronger domestic demand, slowing wage growth and overall excess supply influence the outlook for inflation. The bank expected the core inflation, which had been somewhat firmer than projected in January, to "ease slightly in the second quarter of 2010 as the effect of temporary factors dissipates and to remain near 2 percent throughout the rest of the projection period."

With recent improvements in the economic outlook, the BOC believed that the need for extraordinary policy was passing, and the degree of monetary stimulus should begin to lessen, with the extent and timing depending on the outlook for economic activity and inflation.

In response to the sharp, synchronous global recession, the BOC lowered its target rate rapidly over the course of 2008 and early 2009 to its lowest possible level.

The BOC also provided exceptional guidance on the likely path of its target rate. This unconventional policy provided considerable additional stimulus during a period of very weak economic conditions and major downside risks to the global and Canadian economies.



  • Do you have anything to say?


Special Coverage
  • Premier Wen Jiabao visits Hungary, Britain, Germany
  • From drought to floods
Major headlines
Editor's Pick
  • On Sept. 26, a resident passes by a flower terrace decorated for the coming National Day. (Xinhua/Hang Xingwei)
  • The photo, taken on Sept. 26, shows the SWAT team ready for the joint exercise. (Xinhua/Wangkai)
  • Two metro trains in Shanghai collided Tuesday afternoon, and an identified number of passengers were injured in the accident, the Shanghai-based reported. Equipment failures were believed to have caused the crash on the Line 10 subway, Xinhua quoted local subway operator as saying.
  • An employee at a gold store in Yiwu, located in east China's Zhejiang province, shows gold jewelry on Monday.(Xinhua/Zhang Jiancheng)
  • Tourists ride camels near China's largest desert lake Hongjiannao in Yulin, north China's Shaanx Province, Sept. 24, 2011. Hongjiannao is shrinking as a result of climate change and human activities, and may vanish in a few decades. Its lake area, which measured more than 6,700 hectares in 1996, has shrunk to 4,180 hectares. Its water level is declining by 20-30 centimeters annually and its water PH value has risen to 9.0-9.42 from 7.4-7.8. (Xinhua/Liu Yu)
  • Actors perform royal dance at the Gyeongbok Palace in Seoul, Sept. 27, 2011. A ceremony commemorating the 38th South Korea Sightseeing Day was held in Gyeongbok Palace on Tuesday. (Xinhua/He Lulu)
Hot Forum Discussion