Bank of Canada keeps its key interest rate at 1%

This article was last updated on April 16, 2022

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As predicted by most of the analysts, the Bank of Canada marked its key interest rate at 1 per cent on Tuesday. The central bank said there are chances that it will start increasing rates due to steady inflation and a less hostile global setting.

The bank issued a statement: "In light of the reduced slack in the economy and firmer underlying inflation, some modest withdrawal of the present considerable monetary policy stimulus may become appropriate, consistent with achieving the two per cent inflation target over the medium term."

The Bank of Canada also stressed that Canada’s economic conditions, considering the pace at which it can enhance, will improve in early 2013. The bank has fixed rates since it grew to be the first in the G7 industrialized nations to lift up borrowing costs from crisis lows.

"Overall, economic momentum in Canada is slightly firmer than the bank had expected in January," the bank said. "The external headwinds facing Canada have abated somewhat, with the U.S. recovery more resilient and financial conditions more supportive than previously anticipated."

Moreover, it has been noticed that Bank of Canada Governor Mark Carney has lately taken on a more belligerent tone, as predicted by certain analysts. The bank says inflation will go down in the second quarter but then will climb to the bank’s two per cent target "for the balance of the projection horizon."

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