Canada’s top bank implies rates to remain near zero

Bank of Canada expects to leave interest rates near zero in 2010, warns inflation higher than expected

The Bank of Canada today gave an updated outlook to Canada’s economy for 2011.

The top bank implied interest rates would remain close to zero post Q2 2010 despite the economy slowly growing in 2009.

The bank noted despite marginal growth in 2009, stimulus capital is still necessary to maintain the current growth. The top bank estimated Canada’s economy was operating at about 97-percent of full employment in Q4 2009.

 The bank lowered total growth estimates for 2010 based on new economic revisions. 2011 projected growth is now projected at 3.5-percent.

Slumping demand from Canada’s top trading partner, the United States, and an increasing Canadian dollar, are contributing to falling exports and thereby hampering economic growth in Canada. Interest rates are also being kept low to keep the dollar stabilized to avoid a further slump in net exports.

The bank also said inflation is increasing faster than firstly expected, but maintained it is not overly concerning.

The Canadian dollar is currently trading at 0.969 at the end of today’s trading day.

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Peggy holds a Bachelor Arts degree with honors in Economics from York University in Toronto, Canada. She is a Certified Management Accountant (CMA). She has also passed Level I of the Chartered Financial Analyst (CFA) Program. She is also a realtor. Write to [email protected]
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