This just released today November-17-08, 8:56:49 PM
The Bank of Canada held its benchmark overnight lending rate steady at three per
cent at it’s setting on September 3rd. The trend-setting Bank rate, which is set
0.25 percentage points above the overnight lending rate, remains at 3.25 per
cent.
The Bank’s decision to hold interest rates steady aims to support Canadian
economic growth. Financial markets widely expected the Bank rate to be put on
hold due a dimming outlook for Canadian economic growth and recent remarks by
the Bank that inflation will peak below what it anticipated in its July Monetary
Policy Report.
“Slowing global economic growth is dampening demand and prices for energy and
other commodities, ” said CREA Chief Economist Gregory Klump. “A lower peak in
inflation gives the Bank more time to let previous interest rate cuts support
economic growth.” To stabilize credit markets in the aftermath of the U.S.
sub-prime mortgage market meltdown, the Bank cut the overnight lending rate by
1.5 percentage points from December 2007 to April 2008.
The Bank acknowledged, “[Canadian] domestic demand has slowed modestly but
remains strong.” It highlighted that the Canadian economy “continues to be
supported by financial conditions that remain significantly better than those in
most other major economies and by income gains stemming from past improvements
in the terms of trade.”
“National resale housing sales activity continues to decline from its peak last
year, and new listings are rising,” as the market generally slows down.