The Bank of Canada is maintaining its target for the overnight rate at one per cent once again, pointing to inflation that is expected to hover below its target for the time being.
“With inflation expected to be well below target for some time, the downside risks to inflation remain important,” an official release for the BoC states. “At the same time, the risks associated with elevated household imbalances have not materially changed.”
Still, economic growth was stronger than expected at the end of 2013, shedding some positive light on an issue Bank of Canada Governor Stephen Poloz was quite bearish about at the end of last year.
“In Canada, economic growth in the fourth quarter of 2013 was slightly stronger than the Bank anticipated, and upward revisions earlier in the year further raised the level of GDP,” the release states. “The Bank still expects underlying growth of around 2 1/2 per cent in 2014, with the current quarter likely to be softer.”
On a positive note, the BoC continues to believe the housing market will experience a soft landing as opposed to an all-out crash.
“Meanwhile, recent data support the Bank’s expectation of a soft landing in the housing market and stabilizing debt-to-income ratios for households,” the report states.
The Bank of Canada’s benchmark rate has been held at its one per cent target since 2010. And the BoC is showing no signs it will be hiking its rate anytime soon.