Bank of Canada maintains interest rates

The Bank of Canada has left key interest rates unchanged this week as the country is now set to cut its economic growth outlook as economists had previously predicted.

As well as the fact that there is further difficultly due to the aftershock the economy has suffered following the downturn of the US economy and it is the high dollar that is partly to blame for troubles within Ontario’s manufacturing sector.

The Canadian dollar gained 0.5 percent to C$1.0014 against the US dollar.

Alongside the interest rate decision, the bank announced that it expects economic growth in Canada this year of only one per cent, although the figure of 3.3 percent is expected in 2010.

The bank also warned against inflationary pressures as the CPI inflation is expected to rise by another four percent on the assumption that energy prices will follow current trends.

Paul Ferley, the assistant chief economist at Royal Bank of Canada in Toronto, read into the banks statement as an indication that policy is directed towards tightening and consolidation of prices in order to fight against inflation.

However, Canada’s inflation record this year is better than other Group of Seven industrialised nations although when broken down on a month-by-month basis, Canada’s inflation quickened at the fastest pace since 1991 as the price of oil has fuelled prices.

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