Bank rate stands pat... for now.
Bank of Canada Interest Rate Announcement - May 25, 2016
The
Bank of Canada announced this morning that it is maintaining its overnight rate
at 0.5 per cent. In the press release accompanying the decision, the Bank cited that inflation and economic growth
were evolving roughly in-line with expectations, though household vulnerability
to economic shocks has moved higher due to high debt burdens.
The Canadian economy got off to a very strong start and will likely end up
recording real GDP growth above 3 per cent for the
first quarter of the year. However, much of that growth was front loaded and
more recent data has been weaker. Growth is expected to slow sharply in the
second quarter as a result of the wildfires in Alberta and their impact on oil
production before rebounding in the third quarter and ramping up to end the
year. Slower growth through the summer months will keep the Bank on the
sidelines though a probable tightening of monetary policy by the US Federal
Reserve as early as June may add some upward pressure to Canadian long-term
interest rates.