The Bank of Canada (BoC) announced this morning that it is keeping its target overnight rate, the main influential interest rate in Canada, at 1/4%. They also said that they are commited to trying to hold this rate steady until the end of Q2 2010 or July 2010.
In the release, the federal bank, also said that there are signs that economic activity around the world is starting to expand due to the monetary and fiscal policy put in place by international governments, however, this activity has only happened recently and additional policies are still needed to sustain this growth.
In Canada, demand is increasing with higher commodity prices and increased business and consumer confidence, although, the higher Canadian dollar and the automotive industries restructuring is moderating growth. The BoC believes that economic growth will be as follows:
- 2009: -2.3%
- 2010: 3.0%
- 2011: 3.5%
And the country will reach production capacity in the middle of 2011.