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April 17, 2013BANK OF CANADA RATE ANNOUNCEMENT Today, the Bank of Canada announced it is maintaining its target for the overnight rate at 1 percent and released the Monetary Policy Report - April 2013, providing the Bank’s outlook for the global and Canadian economies.
The Bank expects global economic activity to grow modestly at 3.0 percent in 2013 before strengthening to 3.6 percent in 2014 and 3.8 percent in 2015. Global financial conditions have generally eased and market participants have become more confident of a global recovery. US growth will be strengthened by private domestic demand and improvements in external conditions, while fiscal consolidation will continue to weigh on growth. Economic activity in the Euro area is expected to continue to contract in first half of 2013 with activity in the peripheral economies being dampened by fiscal austerity, low confidence and tight credit conditions. China’s real GDP growth is expected to be in the 7.5 and 8 percent range with activity improving in emerging-market economies (EMEs) in Asia and parts of Latin America.
After a weak second half in 2012, the Canadian economy is projected to regain some momentum though 2013 with growth coming from net exports and business investment. Consumer spending is expected to grow at a modest pace with residential investment declining from historic highs. The Bank of Canada lowered their growth projection for 2013 to 1.5 percent from their January Report projection of 2.0 percent. Real GDP is projected to grow 2.8 percent in 2014 and 2.7 percent in 2015 with the economy returning to full capacity in mid 2015. Inflation is expected to remain subdued in coming quarters before gradually returning to 2 percent by mid-2015.
Bank of Canada
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