Wednesday, September 7, 2011

Banque du Canada Holds Target for Overnight Rate at 1.00%

The Bank of Canada maintained its target for the overnight rate unchanged at 1.00%; also holding the Bank Rate at 1.25% and the deposit rate at 0.75%.  The Bank noted: "In light of slowing global economic momentum and heightened financial uncertainty, the need to withdraw monetary policy stimulus has diminished.  The Bank will continue to monitor carefully economic and financial developments in the Canadian and global economies, together with the evolution of risks, and set monetary policy consistent with achieving the 2 per cent inflation target over the medium term."

Previously the Bank of Canada also held the target interest rate unchanged at its July meeting; it's last move was a 25 basis point increase to 1.00% in September last year.  Canada reported annual CPI inflation of 2.7% in July, compared to 3.1% in June, 3.7% in May, and 3.3% in April, the same as March, according to Statistics Canada.  The Bank of Canada has an inflation target of 2 percent.  The Bank next meets to review monetary policy settings on the 25th of October 2011.  The Canadian dollar (CAD) last traded around 0.985 against the US dollar, having strengthened about 5% against its counterpart this year.


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