Tuesday, October 20, 2009

No Change in Bank of Canada Key Rate

As we anticipated, Bank of Canada Governor Carney announced he is leaving the Bank's overnight lending rate unchanged at 0.25% and therefore no changes are expected in the bank prime rate from the current 2.25%.

With inflationary pressures at bay, the Bank is managing to keep their conditional promise to hold rates where they are until the end of the 2nd quarter of 2010.

The high flying Canadian Dollar is expected to dampen positive economic gains experienced since July of this year and the Bank Of Canada now expects that it will reach its inflation target of 2% in the 3rd quarter of 2011 which is one quarter later than earlier forecast.

Canadian bond rates fell after the announcement as traders began backing off from earlier rate hike anticipation and the Canadian dollar was backing off as well in trading earlier today.

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