“The outlook for the Canadian economy also remains largely in line with the April MPR. While a weak first quarter in the United States has raised questions about that economy’s underlying strength, the Bank expects a return to solid growth in the second quarter,” the Central Bank wrote in an official release. This will help advance the rotation of demand in Canada toward more exports and business investment. Recent indicators suggest consumption in Canada is holding up relatively well, given the impact of lower oil prices on gross domestic income.”
Households continue to stimulate the economy and the Bank is expecting impressive growth in the second quarter. The bank will likely look to hold its overnight rate until that growth is achieved, however.
“The Canadian dollar has strengthened in recent weeks in the context of higher oil prices and a softer U.S. dollar,” the Bank wrote. “If these developments are sustained, their net effect will need to be assessed as more data become available in the months ahead.”
The Bank of Canada admits there are still risks to the economy and its recovery, but the bank will continue to monitor those risks over the next few months.
“Risks to financial stability remain elevated, but appear to be evolving as expected,” the Bank wrote. “Weighing all of these risks, the Bank judges that the current degree of monetary policy stimulus remains appropriate and therefore the target for the overnight rate remains at 3/4 per cent.”
The good times will continue to roll on for brokers, following the Bank of Canada’s decision to maintain its record-low rate.