The Bank of Canada (BoC) will maintain the overnight rate target at 1%, it announced December 4.
Global economic growth has been consistent with the BoC’s expectations. Growth in the United States in 2013’s third quarter was stronger than anticipated, but overall, the U.S. economy is gathering momentum as predicted.
Real gross domestic product (GDP) growth in Canada was 2.7% in the third quarter – higher than expected, as in October, GDP was expected to increase 1.6% through the remainder of the year. This does not indicate a rebalancing toward exports and investment, however, said the BoC.
The BoC continues to expect a soft landing in the housing market. The Canadian housing sector has been stronger than anticipated, due to favourable financing conditions.
Inflation has dipped further below the 2% rate target, being kept low by excess supply, increased retain competition and lower gas prices.
Household imbalances have not changed, while downside risks to inflation have increased. Overall, expectations have not changed substantially, and the BoC said the current stimulus remains appropriate.
The bank rate will remain at 1 ¼% and the deposit rate at ¾%.
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