Bank of Canada holds key rate at 1%

May 31, 2011

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

The Bank of Canada’s key points:

In Canada, the economic expansion is proceeding largely as expected
Financial conditions remain very stimulative
With high commodity prices combined with persistent excess demand conditions in major emerging-market economies, are contributing to broader global inflationary pressures.
Bank expects that high energy prices and changes in provincial indirect taxes will keep the total CPI inflation above 3 per cent in the short term.

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 July 19th, 2011.

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