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Bank of Canada holds rate

The Bank of Canada announced on September 4th 2013 that it was keeping its trend-setting overnight lending rate 1 per cent, where it has been since September 2010.

The Bank kept to the message given by its most recent Monetary Policy Report (MPR) released in July in that it still expects modest economic growth and low inflation to continue.

Bank Governor Poloz still expects business investment and exports to pick up, but acknowledged that it is taking longer than he anticipated due to skittish business confidence in the face of global economic uncertainty and slower than hoped for U.S. economic momentum.

The Bank also acknowledged that the Canadian housing market has remained stronger than expected, but that growth in household debt is losing steam.

“The Bank will eventually raise its trend-setting Bank rate but it is no hurry to do so given the ample slack in the Canadian economy,” said Gregory Klump, CREA’s Chief Economist. “The September Bank rate announcement does nothing to change the prevailing consensus among economists that places the first such increase more than a year down the road and that it will be a slow and gradual process.”

As of September 4th, 2013, the advertised five-year lending rate stood at 5.34 per cent, up 0.2 per cent from the previous Bank rate announcement on July 17th.

(CREA 09/04/2013)

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