Bank of Canada maintains overnight rate target

By The IJ Staff | October 25 2017 11:30AM

Photo: Freepik

The Bank of Canada announced Oct. 25 that it has maintained its target for the overnight rate at one per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.

The Bank projects inflation will rise to two per cent in the second half of 2018. “This is a little later than anticipated in July because of the recent strength in the Canadian dollar. The Bank is also mindful that global structural factors could be weighing on inflation in Canada and other advanced economies,” said the Bank of Canada in a statement.

Renegotiation of NAFTA

The Bank expects global growth to average around 3 1/2 per cent over 2017-19. “However, this outlook remains subject to substantial uncertainty about geopolitical developments and fiscal and trade policies, notably the renegotiation of the North American Free Trade Agreement.”

Canada's second quarter economic growth was stronger than expected, notes the Bank. “Growth is expected to moderate to a more sustainable pace in the second half of 2017 and remain close to potential over the next two years, with real GDP expanding at 3.1 per cent in 2017, 2.1 per cent in 2018 and 1.5 per cent in 2019.”