Ottawa, June 6 (IANS) Canada’s central bank has kept its benchmark interest rate at 1 percent, which has been unchanged since September 2010, the longest period it has stayed neutral since the 1950s.
“The outlook for global economic growth has weakened in recent weeks,” said the Bank of Canada Tuesday in a statement about its latest policy decision.
“Some of the risks around the European crisis are materializing and risks remain skewed to the downside”, which it said is leading global financial conditions to a “sharp deterioration”.
“While the US economy continues to expand at a modest pace, and economic activity in emerging-market economies is slowing a bit faster and a bit more broadly than expected,” according to the bank.
It also noted that the “modest” global momentum and “heightened” financial risk aversion have reduced commodity prices.
“To the extent that the economic expansion continues and the current excess supply in the economy is gradually absorbed, some modest withdrawal of the present considerable monetary policy stimulus may become appropriate.”
Economic growth in Canada for the first quarter of 2012 was just 1.9 percent, below the Bank of Canada’s 2.5-percent forecast, reported Xinhua.
The bank will next announce its interest-rate decision July 17, the day before it is scheduled to provide an update on its outlook for Canadian economy and inflation.
