OTTAWA - The Bank of Canada is keeping its key interest rate on hold at one per cent and giving no hint as to when it will start raising rates again.
The decision announced Tuesday came despite a mostly upbeat assessment of the Canadian economy from the central bank that predicts faster growth and a quicker return to full capacity.
Bank governor Mark Carney has resisted pressure to start lifting the benchmark policy rate above one per cent for months and was unlikely to change course when any move would likely become a talking point in the federal election campaign. The bank has not hiked interest rates since last September.
In remarkably neutral language, the bank did indicate it is taking a more positive view of the economic recovery, while continuing to flag trouble spots.
"Although recent economic activity in Canada has been stronger than the bank had anticipated, the profile is largely consistent with the underlying dynamics outlined in January," it wrote in a statement accompanying the rate announcement.
"Aggregate demand is rebalancing toward business investment and net exports and away from government and household expenditures."
"As in January, the bank expects business investment to continue to rise rapidly and the growth of consumer spending to evolve broadly in line with that of personal disposable income, although higher terms of trade and wealth are likely to support a slightly stronger profile for household expenditures than previously projected."
The bank said it believes the Canadian economy will now grow by 2.9 per cent this year — half-a-point higher than its last prediction in January — before slowing to 2.6 per cent in 2012 and 2.1 in 2013.
The Canadian Press
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