BoC Stays the Course

The Bank of Canada kept its main interest rate at 1 percent while saying that an increase remains possible, adding that the domestic recovery will be slowed by weaker global demand for exports.

The world’s 10th largest economy won’t reach full output until the second half of next year, compared with an April prediction for the first half of 2013, the Ottawa-based central bank said. The decision was forecast by all 24 economists surveyed by Bloomberg News.

“While global headwinds are restraining Canadian economic activity, domestic factors are expected to support moderate growth,” policy makers led by Governor Mark Carney, 47, said in a statement. “Some modest withdrawal of the present considerable monetary policy stimulus may become appropriate.”

Housing and employment gains are being offset by the drag from a merchandise-trade deficit and reduced confidence stemming from Europe’s debt crisis. The U.S. Federal Reserve and the Bank of England expanded programs to buy assets in the last month, while the People’s Bank of China and the European Central Bank cut their main interest rates.

Bloomberg

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