Bank of Canada unlikely to rock boat on interest rates (Canadian Press: Published on March 4, 2014)

The Canadian Press
Published Tuesday, March 4, 2014 1:50PM EST

OTTAWA -- Bank of Canada governor Stephen Poloz is widely expected to leave well enough alone when the central bank makes its next interest rate announcement Wednesday morning.

Analysts and markets expect the central bank will stay with its one per cent policy setting that has kept borrowing rates at historic lows and the economy on a relative even keel for at least another year.

The governor's recent dovish stance and concerns about low inflation had raised speculation that the bank might be prepared to cut rates.

But the likelihood of such a scenario playing out diminished last week after Statistics Canada reported the economy expanded by a relatively healthy 2.9 per cent in the fourth quarter.

As well, Poloz's concerns about low inflation eased somewhat after the consumer price index rose to 1.5 per cent in January, closer to the bank's two per cent target.

Analysts added that Poloz is also likely to dampen any talk of an interest rate hike in the near future for fear of strengthening the dollar. Bank of Montreal chief economist Doug Porter says Poloz is pleased about the dollar's recent weakness because it helps with two of the central bank's key goals, to move inflation closer to its target and to boost exports, particularly to the U.S.

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