The Bank of Canada kept its trend-setting Bank Rate at 1.25 per cent on April 17th, 2012. While this was the 13th consecutive policy meeting in which borrowing costs have been left unchanged, it was the first time since last September that a policy announcement has included a reference to the possibility of a rate hike.
The Bank reiterated a number of the more positive developments it first mentioned in the March 8th announcement. These include a stronger profile for U.S. economic growth, as well as reduced risk emanating from Europe, which the Bank now expects will “emerge slowly from recession in the second half of 2012.”
The Bank also noted that “improved global economic prospects, supply disruptions and geopolitical risks,” are keeping oil prices up which if sustained could prove a risk to the improvement in economic momentum.
In Canada the Bank again declared the biggest risk to be high household debt, adding that it expects households will continue to add to their debt burden as “private domestic demand will account for almost all of Canada’s economic growth over the projection horizon.”
Source: Oakville Miltron Real Estate Board - CREA Stats