(menafn – ecpulse)
Bank of Canada announced today that the benchmark interest rates were left unchanged at 1.00 percent, where the BOC signaled that it expects growth to expand by 2.9 percent in 2011, compared with the prior projection of 2.4%.
The BOC signaled that demand from emerging markets is boosting commodity prices, while the BOC also signaled that it will carefully consider increasing the benchmark interest rates in the future, the BOC also signaled that the economy will reach its potential 6 months earlier than previously thought.
The BOC also highlighted that the economy has “material excess supply”, which signals that prices pressure should remain under control, where the BOC signaled that underlying inflation remains subdued, although the BOC signaled that total CPI is expected to reach 3 percent by the second quarter of 2011, before falling back to target at 2 percent in mid 2012.
The BOC also signaled that the rising value of the Canadian dollar represents a threat to economic growth, however, the BOC still expected the U.S. economy to strengthen, which would support the Canadian economy, since the United States is Canada’s largest trading partner.
The BOC also sees that the global recovery is more solid now, while the BOC also signaled that it expects the European economy to strengthen as well despite the debt crisis.
The BOC also expects the Canadian economy to expand at 2.6% in 2012, compared with 2.8% in its earlier projection, while inflation is expected to be at the 2 percent target by middle of 2012, the BOC said it expects the economy to expand at 2.1 percent in 2013.