Bank of Canada Interest Rate Announcement

News forwarded from the BCREA

The Bank of Canada announced today that it will hold its trend setting target overnight rate at 1.00 per cent. The Central Bank reported that the economic outlook for Canada has changed and it expects the economic recovery to be more gradual than projected earlier in the year. More modest growth reflects a more gradual global recovery and a more subdued profile for household spending.

Inflation has been below expectations and points to continuing excess supply and slowing in the growth of unit labour costs. The Central Bank now believes the gap between potential economic output and actual output won’t close until the end of 2012 rather than at the beginning of that year.

BCREA expects the Bank of Canada target overnight rate will remain unchanged until the end of the first quater of 2011. As a result, the prime rate will remain at 3.00 per cent until that time.