The overnight rate target will remain at 1%, the Bank of Canada (BoC) announced October 23.
Global and domestic economic conditions are delaying Canadian exports and business investment, making economic activity lower than expected. Although household spending is stable, household credit growth has been slow and mortgage interest rates have been higher, which the BoC said is indicative of a gradual unwinding of household imbalances.
Real gross domestic product growth is projected to increase from 1.6% in 2013 to 2.3% in 2014 and 2.6% in 2015.
The BoC expects the economy to return to full production capacity around the end of 2015.
Because inflation in Canada has been consistently below target, downside risks to inflation are of increasing importance. However, because of the risk of exacerbating already-high household imbalances, the BoC said the stimulus currently in place remains appropriate.
Accordingly, the bank rate remains at 1 ¼% and the deposit rate at 3/4 %.
