Bank of Canada Governor Mark Carney kept the main interest rate unchanged in his final announcement and reiterated tighter policy may be needed after “a period of time” as the economic expansion progresses.
The benchmark rate on overnight loans between commercial banks remained at 1 percent for the 22nd consecutive meeting in a decision from Ottawa that was expected by all 23 economists in a Bloomberg News survey. Inflation has been slower than expected since the last decision and economic growth has been faster, policy makers said.
“The considerable monetary policy stimulus currently in place will likely remain appropriate for a period of time, after which some modest withdrawal will likely be required, consistent with achieving the 2 per cent inflation target,” policy makers led by Carney, 48, said in a statement today that echoed the last decision on April 17.
Carney departs Canada as the only Group of Seven central banker signaling the chance of higher interest rates while the U.S. Federal Reserve and Bank of Japan buy assets to rekindle growth, an emergency policy he will oversee upon taking over the Bank of England July 1. Incoming Governor Stephen Poloz will take responsibility for a Canadian economy increasingly reliant on exports and investment as indebted consumers and governments curb spending.
The central bank said annualized first-quarter economic growth probably exceeded its April forecast of 1.5 percent. Economists surveyed by Bloomberg expect the May 31 report from Statistics Canada to show a 2.3 percent expansion.