Bank of Canada announcement

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The Bank of Canada will maintain its target for the overnight rate at 1/2%.

“Inflation in Canada is evolving broadly as expected. Total CPI inflation remains near the bottom of the Bank’s target range as the disinflationary effects of economic slack and low consumer energy prices are only partially offset by the inflationary impact of the lower Canadian dollar on the prices of imported goods,” the Bank of Canada said in a release. “As all of these factors dissipate, the Bank expects inflation will rise to about 2 per cent by early 2017. Measures of core inflation should remain close to 2 per cent.”

The bank did acknowledge that commodities and oil prices continue to take a hit and negatively impact the economy. It suspects the economy stalled in Q4 2015. It also expects growth to be delayed.

“The Bank now expects the economy’s return to above-potential growth to be delayed until the second quarter of 2016,” the BoC said. “The protracted process of reorientation towards non-resource activity is underway, helped by stronger U.S. demand, the lower Canadian dollar, and accommodative monetary and financial conditions.”

On a bright now, however, employment and household spending remains strong.

“The Bank projects Canada’s economy will grow by about 1 1/2 per cent in 2016 and 2 1/2 per cent in 2017. The complex nature of the ongoing structural adjustment makes the outlook for demand and potential output highly uncertain,” the bank said. “The Bank’s current base case projection shows the output gap closing later than was anticipated in October, around the end of 2017. However, the Bank has not yet incorporated the positive impact of fiscal measures expected in the next federal budget.”
 
  • Henry on 2016-01-20 11:38:36 AM

    Big mistake. They must cat it to 0.25%

  • John Martin on 2016-01-20 12:07:22 PM

    The Bank projects the Canadian economy to grow by 1 1/2% in 2016 and 2 1/2% in 2007. Hogwash! These people are a joke. Nothing but guessing. A lot like the weather forecast people predicting what the weather is going to be like in a few weeks down the road. Always changes, they are seldom right. If ever. Here we have people predicting six months and a year ahead of what to expect. What a joke. Put the imaginary crystal ball away. Forget all this ridiculous prediction rubbish. Start for once and comment on reality for a change. Where does one apply for one of these positions. Will supply my own Christal ball...

  • Alan Dayes on 2016-01-27 12:03:04 PM

    Bank of Canada projections are based on the fundamental realities of the functioning marketplace. It is not guess work. While they are not always right, they are usually very close and they do provide us with the reality of the times.

  • Paladin on 2016-04-21 10:54:13 PM

    INFLATION is at 2% JUST FOR MONEY
    how about EVERTHING ELSE..
    plus : taxes.
    add: increased COST of services
    add: CANADA dollar -30%
    add: depressed wages in CANADA
    add: INCREASED UNEMPLOYMENT
    add: increased TUITION COSTS
    add: increased COST OF LIVING
    add: not a penny saved for RETIREMENT
    add: VOTER NON CONFIDENCE
    add: a pinch of SALT .

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