Key Lending Rate Kept Unchanged at 1 per cent by Bank of Canada

This article was last updated on April 16, 2022

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The Governor of Bank of Canada, Mark Carney, made an announcement on Wednesday declaring that key overnight interest rate will remain unchanged at 1 per cent, while sharing that the bank is lowering its growth expectations for 2013 due to some global and domestic economic challenges. Carney alleged that the economy of Canada suffered from a more-than-expected slowdown in the second half of 2012, and in the near future the “economic activity is expected to be more restrained.”

Carney was announcing the details of the bank’s quarterly Monetary Policy Report, when he alleged that “the Bank now expects the economy to reach full capacity in the second half of 2014, later than anticipated in October.” Consequently, the bank also altered its estimated growth estimate in 2013 from 2.3 per cent to 2 per cent, followed by 2.7 per cent in 2014. Carney did not mention when the bank is expecting to raise its overnight lending rate, although he alleged that some “modest withdrawal” of stimulus is expected though any such move is “less imminent than previously anticipated.” Carney stated that “we’ll adjust monetary policy, including guidance, as appropriate in order to meet our (2 per cent) inflation target.”

The official statement of the bank mentioned that global economy is also continuing to constantly affect the Canadian economy. It indicated towards the growth of the U.S. being limited due to the indecision of fiscal cliff negotiations, while Europe remains in a recession and economic recovery.