Bank of Canada keeps overnight interest rate at 1%
Shrugging off a recent surge in inflation as temporary, the Bank of Canada held its key overnight interest rate at 1% on Wednesday, as expected, and insisted it could just as easily cut rates as raise them.
The Bank of Canada's latest statement echoed, was to emphasize excess capacity in the economy and the need for continued monetary policy stimulation. It's said that with inflation close to the bank's 2% target, the risk of a downward drift in inflation expectations has diminished.
Higher energy prices, fall of the Canadian dollar and sector-specific shocks such as costlier meat has resulted in higher inflation. The Bank of Canada demonstrated it's disappointment in economic growth and has thus pushed back, again, to mid-2016, it's expectations for when the economy would reach it's 2% target for core inflation.