Bank of Canada holds Key interest rate April 12th 2011

April 12, 2011

The Bank of Canada holds their key lending rate at 1% for the fifth consecutive meeting. Banks therefore are expected to keep their prime rates at 3%.

The Bank of Canada’s key points:

Global recovery is becoming more firmly entrenched and expected to continue at a steady pace.
Growth is solidifying in the US.
European growth has strengthened.
The disasters that struck Japan will severely affect its economic activity in the first half of this year.
Despite the significant challenges that weigh on the global outlook, global financial conditions remain very stimulative and investors have become noticeably less risk averse.
Economic activity in Canada has been stronger than anticipated,.
Aggregate demand is rebalancing towards business investment and net exports, and away from government and household expenditures.
The bank expects that the economy will return to capacity in the middle of 2010.
The persistent strength of the Canadian dollar could create even greater headwinds for the Canadian economy.

With rates staying low, we are continuing to recommend that clients stay in their variable rate mortgages. The date of the Bank of Canada’s next announcement is scheduled for May 31st, 2011.

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