Bank of Canada Rate Hold

The Bank of Canada announced today that it will hold its rate at 1/2 percent. Banks therefore are expected to keep their prime rates at 2.25%.

The Bank of Canada states in their announcement while the global economy is progressing positively, there is still risk going forward. In Canada, the demand for Canadian production seems more local than international, resulting in a weaker than expected GDP growth. As well inflation seems a little higher than their October Report, although still well within range.

The risks to the current direction in rates are a potentially strong global recovery that would heighten demand, causing inflation outside of projection. Offsetting that demand is a high Canadian dollar which stifles that demand from Canadian manufacturers. The Bank of Canada views current conditions as balanced and reaffirms its projection to hold rates until the end of June 2010.