Bank of Canada Keeps Overnight Interest Rate at 1.00%

The Bank of Canada held its target for the overnight rate at 1.00%.  The Bank noted on the Canadian economy: "Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent. With the target interest rate near historic lows and the financial system functioning well, there is considerable monetary policy stimulus in Canada. 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 January meeting; it's last move was a 25 basis point increase to 1.00% in September last year.  Canada reported annual CPI inflation of 2.5% in January, compared to 2.9% in November and October, 3.2% in September, 3.10% in August, 2.7% in July, 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 over the medium term.  

Canada reported year on year GDP growth of 3.4% in Q3 2011, 2.2% in Q2, and 2.9% in Q1.  The Canadian dollar (CAD), also known as the Loonie, has weakened by 2% against the US dollar over the past year, while the USDCAD exchange rate last traded around 0.99.  The Bank of Canada next meets on the 17th of April 2012.

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