One of the most concerning matter on the Bank of Canada’s agenda is now disinflation, as the central bank continues its benchmark key rate unchanged at 1 per cent. According to the bank, a persistent and unforeseen decrease in inflation is a result of excessive supply in the economy and increased competition in the retail sector, while an influx of new U.S. chains is shaking up the industry.
According to the official statement issued by the Bank of Canada on Wednesday, it announced its final rate for 2013, acknowledging that “the downside risks to inflation appear to be greater.” However, despite having admitted that, the bank claims that it has to “balance the risks,” which allegedly justify its decision to leave the overnight lending rate unchanged where it has been kept since September 2010. Meanwhile, the consumer prices have reached at a minuscule annual rate of 0.7 per cent across the country in October. Whereas, inflation is not only less than the central bank’s 2 per cent target, but is almost at the bottom end of its 1 to 3 per cent target band.