The Bank of Canada today announced that it is maintaining its target for the rate to a 1/2 day hundred. The discount rate is accordingly 3/4 per cent and the deposit rate is 1/4 per cent.
Inflation has evolved in line with the outlook for monetary policy in July the Bank Report (MPR). The total CPI inflation remains near the bottom of the target range, reflecting the year from one year to lower prices for energy-using products. Core inflation was nearly 2 percent, with disinflationary pressures of economic downturn is offset by the transitory effects of the past depreciation of the Canadian dollar and certain factors specific to the sector. The dynamics of GDP growth in Canada described in MPR July also remain intact. The stimulant effects of previous monetary policy actions work their way through the Canadian economy.
Canada's natural resources sector continues to adjust to lower oil prices and other commodities, with some impact on the rest of the economy. These adjustments are complex and should take considerable time. Economic activity continues to be supported by strong household spending and a strong recovery in the United States, with particular strength in the US economy in sectors that are important to Canadian exports.
The increased uncertainty about growth prospects for China and other emerging market economies, however, raises questions about the pace of the global recovery. This has contributed to increased volatility in financial markets and commodity prices. Canadian dollar movements help to absorb some of the impact of prices of commodities and facilitate the adjustments that take place in the Canadian economy. While the overall picture export is still uncertain, the latest data confirm that exports sensitive exchange rates gives the momentum.
Meanwhile, the risks to financial stability evolve as expected. Taking all these developments into consideration, the Bank judges that the risks to the inflation outlook remain in the area for which the current stance of monetary policy is appropriate. Therefore, the target for the overnight rate unchanged at 1/2 percent.
through the Bank of Canada
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