Yet again, Bank of Canada stands patWith all the global economic uncertainty dominating the news, it’s not really a surprise that the Bank of Canada has decided to keep its target overnight rate at 1%. This is great news for variable rate holders and those who are thinking about getting into the market. The bank offered a list of reasons for its decision. Here are some of the highlights: - Economies across the globe are in for restrained growth, as banks and households continue to deleverage, fiscal austerity continues to increase, and business and consumer confidence continues to decrease. - The biggest threat to the global economy is the Euro area, which will likely experience a brief recession. The Bank’s base-case scenario is assuming that the Euro recession will be contained, but acknowledges that this may be optimistic. - The U.S. will likely experience weak real GDP growth into the first half of 2012, after which point it will gradually start to strengthen. - The Canadian economy has weakened since July due to less favourable external factors in the financial, confidence and trade channels. The Bank expects growth in Canada to be slow through to mid-2012 before picking up as the global economy improves. - The Bank expects 2.1% growth in 2011, 1.9% in 2012, and 2.9% in 2013. The Canadian economy is expected to return to full capacity by the end of 2013.    |
