The Bank of Canada is keeping its target overnight rate at 1% – the same level it has been since September 2010.
The economy in Canada has slightly outperformed expectations since the central bank released its last report in January. Further growth of around 2.5% is projected, but the first quarter is likely to be softer.
"Exports have been a little stronger than previously thought but continue to underperform, and overall business investment has yet to pick up," the bank said in a March 5 news release.
The bank said inflation will remain well below its target rate of 2% throughout 2014, due to excess supply in the economy and competition in the retail sector. Inflation has remained below the target for the past year, with a year-over-year rate in January of 1.5% – within the bank’s general range of 1-3%.
The bank continues to expect a soft landing in the housing market, and for household debt-to-income levels to stabilize, as the risks associated with household imbalances, referring to high personal debt levels, have not changed significantly since the bank's last rate announcement in January.
The global economy has been growing as anticipated, but uncertainty has increased.
"Volatility in global financial markets has increased somewhat, reflecting buoyant market conditions in most advanced economies and increased risk differentiation among emerging markets," the bank said.
In addition, the bank said that the crisis in the Ukraine have added "geopolitical uncertainty" worldwide. The bank said the economy will grow in both 2014 and 2015.
"The bank judges that the balance of risks remains within the zone for which the current stance of monetary policy is appropriate and therefore has decided to maintain the target for the overnight rate at 1%," the bank said.
"The timing and direction of the next change to the policy rate will depend on how new information influences this balance of risks."
The Bank of Canada will announce its next rate decision on April 16.
