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Bank of Canada Keeps Policy Interest Rate at 1%

The Bank of Canada kept its policy interest rate at 1 percent today, as expected, and removed the word “neutral” from its statement, saying that it’s stopping the use of “forward guidance” on the future path of interest rates for now.

The economy won’t reach full output until the second half of 2016, the bank said. Inflation will slow to an average of 1.4 percent in the second quarter of 2015, the bank said, compared with its July forecast for inflation to slow to 1.7 percent in the second quarter of 2015.

“The Bank judges that the risks to its inflation projection are roughly balanced,” policy makers led by Governor Stephen Poloz, 58, said in a statement from Ottawa. While the bank dropped a line used at its Sept. 3 decision — that it “remains neutral with respect to the next change to the policy rate” — Poloz said he will probably return to giving clues about interest rates in the future.

Bloomberg [1]

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