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Bank of Canada holds interest rates

As expected, the Bank of Canada once again decided to keep its key rate at one per cent, a level that has helped keep borrowing costs near historic lows for several years.

The bank said Wednesday that inflation is expected to stay “well below target” for some time.

Inflation is expected to return to the two per cent target in about two years, and during that time global growth is expected to strengthen, the bank said in a statement that accompanied the announcement.

Economists were paying close attention to the central bank’s statement in the wake of a falling Canadian dollar, dismal employment data and weak inflation.

The banks said stronger U.S. demand and the lower Canadian dollar should help exporters and manufacturers by increasing sales competiveness south of the border, and in turn, boost business confidence and investment.

However, it will make purchases outside of Canada more expensive.

The bank also noted that it expects a soft landing in Canada's housing market and a stabilization of household debt.


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