The Bank of Canada announced Wednesday morning it will maintain its target for the overnight rate at 0.5%.
“The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1/2 per cent,” the bank writes in a release. “The Bank Rate is correspondingly 3/4 per cent and the deposit rate is 1/4 per cent.”
According to the Bank of Canada, its economic stimulation efforts are “working their way through the Canadian economy.”
“Inflation has evolved in line with the outlook in the Bank’s July Monetary Policy Report (MPR). Total CPI inflation remains near the bottom of the target range, reflecting year-over-year price declines for consumer energy products,” the bank writes. “Core inflation has been close to 2 per cent, with disinflationary pressures from economic slack being offset by transitory effects of the past depreciation of the Canadian dollar and some sector-specific factors.”
The global economy – especially in China – continues to be a concern for the central bank.
“This has contributed to heightened financial market volatility and lower commodity prices,” the bank writes. “Movements in the Canadian dollar are helping to absorb some of the impact of lower commodity prices and are facilitating the adjustments taking place in Canada’s economy.”
While the overall export picture is still uncertain, says the bank, the latest data confirm that exchange rate-sensitive exports are regaining momentum.
Meanwhile, risks to financial stability are evolving as expected, hence the decision to hold the target at its current rate.