The Bank of Canada announced that it is keeping its target overnight interest rate at 3%.

The bank stated that the 3 major reasons for keeping interest rates steady in July remained in August, namely:

  • the course of the U.S. economy
  • ongoing turbulence in global financial markets
  • sharp increases in commodity prices, the risk identified in
    July that these prices could be weaker than assumed has materialized.
  • Other major points include:

  • In Canada, domestic demand has slowed modestly but remains strong
  • While total CPI inflation has moved above 3 per cent, core inflation has stayed at 1.5 per cent as expected
  • the Bank continues to expectthat total and core inflation will converge on 2 per cent in the second half of 2009