… just kidding. The Bank of Canada has, once again, announced it will maintain its target for the overnight rate at one per cent.
“Total CPI inflation has moved up to around the two per cent target in recent months, sooner than expected. Core inflation has also increased but remains below two per cent,” the BoC’s official statement reads. “Recent higher inflation is attributable to the temporary effects of higher energy prices, exchange rate pass-through and other sector-specific shocks, rather than to any change in domestic economic fundamentals.”
Inflation is expected to fluctuate around the two per cent mark for the next two years as these contributing factors ease.
The global economy is growing at a slower rate than originally predicted in the bank’s April Monetary Policy Report but it remains optimistic that momentum will eventually be gained once again.
“Serial disappointment with economic performance during the past several years has mainly reflected the impact of private-sector deleveraging, fiscal consolidation and, especially, the lingering effect of uncertainty on business investment and trade,” the statement reads. “Nevertheless, the Bank continues to project that global growth will gather momentum as these headwinds abate.”
However, due to the downgrade of the global outlook, Canadian economic activity is predicted to be weaker than originally anticipated.
The bank is still calling for a soft landing to Canada’s housing market.
“Meanwhile, household imbalances continue to evolve constructively and recent data are broadly consistent with a soft landing in Canada’s housing market,” the statement reads. “Real GDP growth is projected to average around 2 1/4 per cent during 2014–2016. Consequently, the economy is expected to reach full capacity around mid-2016, a little later than anticipated in April.”