Tuesday, March 2, 2010

Bank of Canada Maintains Key Rate

The Bank of Canada announced today that it is leaving its key interest rate unchanged, and repeated its commitment to hold the rate steady until the second quarter of 2010, conditional upon inflation.

In its statement the Bank judges that the factors affecting its inflation outlook are “roughly balanced” at this time. “On the upside, the main risks are stronger-than-projected global and domestic demand. On the downside, the main risks are a more protracted global recovery and persistent strength of the Canadian dollar.”

The Bank also noted that “the economy grew at an annual rate of 5 per cent in the fourth quarter of 2009, spurred by vigorous domestic spending and further recovery in exports.”

Pricing for loans that are typically linked to a lender’s prime rate (such as variable-rate mortgages, variable-rate credit cards) is expected to remain unchanged in the wake of today’s announcement. Pricing for fixed-rate mortgages is not directly affected by the Bank’s key rate.

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