Bank of Canada interest rate remains at 0.25 per cent

The Bank of Canada has kept rates at historic lows, Tuesday, but it has renewed its warning about the negative impact of a soaring loonie.

The central bank said it will keep its key policy rate at the practical low of 0.25 per cent, giving no hints it is about to move off its stimulative stance in the near future.

But the bank has downgraded its forecast for the economy going forward and it's all because of the Canadian loonie, which has soared over the past few weeks.

The Canadian dollar has been trading at about 97-cents (U.S.) and many economists expect the two currencies to be on a par soon.

Over time, the strengthening loonie is expected to fully offset the favourable developments in the economy that have occurred since July, the bank said.

As a consequence, the country's gross domestic product is still expected to grow by three per cent next year, but only 3.3 per cent in 2011, two-tenths of a point less than the Bank of Canada had previously forecast in July.

SOURCE: 680 News, The Canadian Press Ottawa 2009-10-20 10:58

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