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September 4, 2008

Bank of Canada retains 3% interest rate

by Richard Kilner

Story link: Bank of Canada retains 3% interest rate

The Bank of Canada has retained its overnight interest rate at 3%, with the bank rate unchanged at 3.25%.

The Bank of Canada has accurately forecast the path of financial turbulence and difficulties within the US economy, but has been less precise with its prediction of how the interaction between a weakened US economy and tight credit conditions would affect the country’s future perspective.

The Bank has stated that it believes commodity prices, which have recently soared with some prices falling of late, will remain volatile in the immediate future.

The Canadian dollar has fallen against the US dollar, and domestic demand has declined moderately but on the whole remains healthy.

Canada’s general financial position remains better than that of most comparable economies.

Core inflation has remained at 1.5%, with the total CPI rate above 3%. The Bank believes that the factors causing this divergence will gradually be removed and the two rates will meet at around 2% in the latter half of next year.

 

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