BOC Left Policy Rate Unchanged, Kept Rate Hike Rhetoric

BOC Left Policy Rate Unchanged, Kept Rate Hike Rhetoric

The Bank of Canada left its benchmark overnight rate target unchanged at 1% in October. Policymakers retained the view that 'some modest withdrawal of monetary policy stimulus will likely be required'. The central bank also raised its GDP forecast for this year while maintaining and reducing the outlooks for 2013 and 2014 respectively

Concerning the global economic outlook, the BOC stated that the US economy is growing at a 'gradual pace' while Europe is in recession and recent indicators point to a 'continued contraction'. In China, growth has slowed 'more than expected though there are signs of stabilization around current growth rates'. Yet despite global headwind, policymakers anticipated that the domestic economy would have 'moderate expansion'. The BOC adjusted its economic outlook from this year to 2014. As mentioned in the statement, 'after taking into account revisions to the National Accounts, the Bank projects that the economy will grow by +2.2% in 2012, +2.3% in 2013 and +2.4% in 2014'. The central bank also stated that 'following the recent period of below-potential growth, the economy is expected to pick up and return to full capacity by the end of 2013'.