Toronto-Tuesday October 19 ,2010 The Bank of Canada maintained its trend-setting benchmark interest rate at 1 per cent after three consecutive increases. The prime rate will remain at 3 per cent, which means there is no effect on mortgage holders car loans and credit.for the short term. In general, the economic forecast is gloomier than previously predicted. Canada’s economy will likely grow by only 3 per cent this year, from 3.5 per cent, mostly due to a strong start in the first three months of 2010, while 2011 growth was cut to 2.3 per cent from 2.9 per cent, and 2012 growth raised to 2.6 per cent from 2.2 per cent, the bank said, Canada economy is being pulled down by a U.S. recovery that will be weaker than projected,while growth in emerging market economies will also slow to a more sustainable pace, a global turnaround that is “entering a new phase” fraught with uncertainty, and a retrenchment by Canadian consumers, the central bank said in a statement on the decision.
The Bank of Canada sees slower growth on the horizon and has no plans to raise interest rates in the short term.“This more modest growth profile reflects a more gradual global recovery and a more subdued profile for household spending,” the bank said.Bank of Canada governor Mark Carney has the difficult task of balancing a fragile economic recovery with mounting household consumer debt. Economists worry that prolonging lower interest rates could prompt even more borrowing. Inflation in Canada has been slightly below the Bank’s July projection, the bank also signaled that future rate hike may stay put for some time until the middle of next year
Source:The Bank Of Canada
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