The Bank of Canada did as expected this morning and kept interest rates steady. They will maintain their key interest rate, the target for the overnight rate at 0.25%, and reiterated their commitment to hold rates at current levels until the end of Q2 2010.
They cited that the global economic recovery is being fuelled by domestic growth in emerging markets, while the western world’s recovery is due to the monetary and fiscal stimulus by governments.
Closer to home in Canada, economic activity has been higher than expected back in January as the economy grew by an annualized rate of 5% in Q4 2009. The high Canadian dollar and low US demand are acting as the main drags on the economy while inflation seems to be under control.
So no major surprises ahead of the budget announcement on Thursday, and we expect the same from the Finance Minister.