Friday, 16 April 2021 03:00 GMT

Canada central bank maintains key lending rate at 1%

(MENAFN - AFP) Canada's central bank held its key lending rate at one percent on Wednesday, saying an uptick in the US economy is boosting exports but lower oil prices will be a drag on the economy.

The Bank of Canada has maintained the near-record low rate for the past four years.

In a statement, it said the "current stance of monetary policy is appropriate," but added that the economy is "showing signs of a broadening recovery," which should eventually lead to a rise in rates.

Analyst Nick Exarhos of CIBC World Markets summed up the bank's position as "somewhat more hawkish than expected."

"Stronger exports are beginning to be reflected in increased business investment and employment," the bank said.

"This suggests that the hoped-for sequence of rebuilding that will lead to balanced and self-sustaining growth may finally have begun.

"However, the lower profile for oil and certain other commodity prices will weigh on the Canadian economy."

The central bank also noted that inflation has risen more than expected. It blamed a lower Canadian dollar and higher meat and telecommunications prices, but suggested this was temporary.

The recent plunge in oil prices to less than $70 a barrel is forecast to ease inflation pressures.

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