The Bank of Canada today maintained its benchmark interest rate at 0.5 per cent.
The rate affects the saving and borrowing rates that Canadians get from their lending institutions banks. The central bank cut its rate twice last year in an attempt to stimulate the economy.
Headed into the decision, economists were evenly split as to whether the bank would cut again or stand pat. The Canadian dollar jumped about half a cent on the rate news — a sign that investors were worried about a rate cut, and priced it into the value of the currency.
When the central bank didn't cut the key lending rate, it marked a vote of confidence in the loonie, which to 68.89 cents US.
The bank opted to stand on the sideline in part because the Canadian economy, while struggling, is still showing signs of a slow rebound later this year.
"The dynamics of the global economy are broadly as anticipated," the bank said in a statement. "The bank … judges that the current stance of monetary policy is appropriate, and the target for the overnight rate remains at 0.5 per cent."
Later Wednesday, the bank will release its quarterly monetary policy report (MPR), which should give a more fulsome view of the bank's views on the economy.
Bank of Canada governor Stephen Poloz will speak to the media at 11:15 a.m. ET after the report is released.
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