Economy to reach “full capacity” mid-2016, speculates Canada’s central bank


“Bank of Canada holds interest rate at 1% – again,” reads the headline for Pete Evans’ article posted on the CBC News website yesterday.

“Canada’s central bank decided to keep its benchmark interest rate at one per cent today, the same level it has been at for almost four years,” Evans writes.

Evans continues, “The Bank of Canada announced in its latest policy decision on Wednesday that it will keep its target for the overnight rate — the yardstick against which most consumer loans are based — steady at one per cent.

Although most economists were expecting no change in the rate, the choice of wording is often closely scrutinized to see if the central bank is leaning toward a rate hike or a cut, if and when it does decide to act. Instead of suggesting rate hikes are in the offing, the bank softened its tone and suggested it’s in no hurry to hike rates if and when it chooses to act. ‘The bank is neutral with respect to the timing and direction of the next change to the policy rate, which will depend on how new information influences the outlook and assessment of risks,’ the bank said.” Evans also points out in his article, “The economy is expected to reach full capacity around mid-2016,” a quote from a Bank of Canada statement. Read the full article here.

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