Bank of Canada holds key interest rate at 1%

Written By Unknown on Rabu, 03 September 2014 | 22.40

Bank of Canada 20140612

In the Bank of Canada's latest policy decision, governor Stephen Poloz unsurprisingly held the overnight rate steady at one per cent. (The Canadian Press)

Canada's central bank held its key interest rate at one per cent Wednesday, meaning it has now been at the same, near-record level for four years.

In its latest policy decision, the Bank of Canada also kept its "neutral" stance, which says governor Stephen Poloz has no plans to raise or lower rates anytime soon.

The bank says the risks to the outlook for inflation and household debt remain the same as before.

"The balance of these risks is still within the zone for which the current stance of monetary policy is appropriate," said the bank's statement. "The bank remains neutral with respect to the next change to the policy rate: its timing and direction will depend on how new information influences the outlook and assessment of risks."

The rate has been at one per cent since September 2010, the longest pause in Canadian history.

Retail banks use the overnight benchmark for setting their prime lending rate, or the rate they pay to each other for short-term loans. That can affect how much interest consumers pay on things like credit card debt and mortgages.

Growth in Canada was almost exactly in line with the bank's expectations in the second quarter. 

Last week, Statistics Canada reported the economy grew by an annualized 3.1 per cent, the strongest pace since 2011. 

Exports, which have been a consistent area of concern for Poloz, were a main driver, surging by 4.2 per cent in the quarter after declining by 0.2 per cent in the first three months of the year.

But according to the bank, "this pickup will need to be sustained before it will translate into higher business investment and hiring."

The bank says the global economy is chugging along at an expectedly mixed pace, with strong business investment driving the U.S. recovery and the situation in Ukraine weighing on Europe.   


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