“…Global headwinds continue to restrain economic activity…”
“Economic growth is expected to pick up through 2013…”
“Core inflation…is expected to return, along with total CPI inflation, to 2 per cent over the course of the next 12 months.”
“To the extent that the economic expansion continues and the current excess supply in the economy is gradually absorbed, some modest withdrawal of the present considerable monetary policy stimulus may become appropriate.”
When it will become “appropriate” is anyone’s guess. CIBC economist Avery Shenfeldcalls the Bank’s jawboning on rates “only words, not action.” Its hands are tied with a global and domestic economy that remain in choppy waters.
For what it’s worth, Bay Street rate seers forecast the next boost to prime in mid- to late-2013. That date has been continually pushed back since the BoC last lifted rates in September 2010. Pretty much the most one can surmise with confidence is that rate cuts appear out of the picture this year, given the Bank’s tightening bias.
The bond market was little changed on the BoC announcement with the 5-year benchmark drifting around 1.33%. Its one-year average is 1.40%.