Mar 6, 2013 / 8:58 pm
The Bank of Canada is hinting it is less concerned about household debt levels, making it possible to keep attractive interest rates in place longer to spur investment and economic growth.
As expected, the central bank kept its overnight policy rate at one per cent on Wednesday, the level that has been in place for about two-and-a-half years to ease Canada's recovery from the 2008-9 global financial meltdown.
But the bank also signalled a mild change in its thinking by softening its closely followed forward-looking guidance on rate hikes, suggesting it now expects the current rate to remain in place longer than it had previously expected.
Its statement also mentioned a "constructive evolution" in household finances.
"With continued slack in the Canadian economy, the muted outlook for inflation, and the more constructive evolution of imbalances in the household sector, the considerable monetary policy stimulus currently in place will likely remain appropriate for a period of time," the bank said.
Some economists had been expecting the bank to drop its bias towards a tighter monetary policy altogether, but the statement did not go as far.
Still, markets saw the shift as dovish enough to drop the Canadian dollar to a fresh, eight-month low, down 0.49 of a cent to 96.79 cents US following the announcement.
Read more Canada News
- 5.1 earthquake near Ottawa
- Mom and 5-year-old killed in Calgary
- Cocaine video & Toronto's mayor
- Duffy quits Conservative caucus
- Liquor Control Board averts strike
- Senator Duffy resigns from caucus
- Accused sexual predator to plea guilty
- Duffy debacle
- On the road again-Harper pumps pipeline
- Giant pandas' VIP debut at Toronto Zoo
- Duffy claimed campaigning expenses
- Killer cement truck driver up for parole