Bank of Canada Keeps Rates Unchanged as Expected at 1.25%

Investing.com – The Bank of Canada (BoC) decided to keep its benchmark interest rate unchanged on Wednesday.

As expected, the BoC said it was holding its steady at 1.25%.

The Canadian monetary authority also noted that the bank rate is correspondingly 1.50% and the deposit rate is 1.00%.

Furthermore, the BoC noted that inflation remained close to 2% as temporary factors dissipated.

“The transitory impact of higher gasoline prices and recent minimum wage increases will likely cause inflation in 2018 to be modestly higher than the Bank expected in its January Monetary Policy Report (MPR), returning to the 2 per cent target for the rest of the projection horizon,” it noted in the release.

The central bank admitted that Canada’s GDP growth in the first quarter was weaker than it had forecast, but expects a rebound in the second quarter.

The BOC predicted that Canada will see 2% average growth in the first half of 2018.

“The economy is projected to operate slightly above its potential over the next three years, with real GDP growth of about 2% in both 2018 and 2019, and 1.8%in 2020,” it said.

The BoC concluded by stating that it believed “higher interest rates will be warranted over time, although some monetary policy accommodation will still be needed to keep inflation on target”.

was to comment on the decision at a press conference at 11:15AM ET (15:15GMT).

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