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Bank of Canada Holds Rates, ‘too early’ to Say Growth Sustainable

Posted April 12, 2017

Under Economic Issues, International Trade Issues

(Andrea Hopkins and Leah Schnurr – Reuters)

The Bank of Canada held interest rates steady on Wednesday, as expected, saying that while growth has been stronger than it anticipated in January it is “too early” to conclude that the economy is on a sustainable growth path.

Reiterating its position that material excess capacity remains in the economy, the central bank nudged up its growth forecast for 2017 but lowered its projection for potential growth to reflect “persistently weak investment.”

Taken together, the faster growth in 2017 and lower potential growth means the bank now projects the output gap to close in the first half of 2018, sooner than the mid-2018 timeline policymakers predicted in January. Click here to read more.

Related: Bank of Canada Maintains Overnight Rate Target at 1/2 Percent (Bank of Canada)