The Bank of Canada kept the status quo on it’s key lending rate today. Prime rate will therefore stay where it is, at 4.75%.
The Bank seemed less concerned about inflation in this statement, saying, “Core inflation has stayed at 1.5 per cent as expected.” The BoC expects that “total and core inflation will converge on 2 per cent in the second half of 2009.” Falling commodity prices could help in that respect.
As for our economy, the Bank basically described Canada’s output as “slightly lower than expected,” but not enough so to cut interest rates.
The 5-year bond seemed somewhat unfazed by the BoC’s comments. It’s still hovering near 3%. The Canadian dollar, however, sank to it’s lowest level versus the U.S. dollar in over a year, before rebounding strongly.
The BoC’s statement today offered few clues as to when they would alter rates next. We’ll see what happens between now and the BoC’s next interest rate meeting on October 21.
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