The bank of Canada announced today that it is again raising the overnight rate by 1/4% today (bringing the bank prime rate to 2.75%). This rate increase was expected by most annalists and the major banks. The overall Canadian economic recovery pace has slowed down slightly from what was originally expected.
The Bank expects the economic recovery in Canada to be more gradual than it had projected
Inflation in Canada has been broadly in line with the Bank's April projection. While the Bank now expects the economy to return to full capacity at the end of 2011, two quarters later than had been anticipated in April, the underlying dynamics for inflation are little changed. Both total CPI and core inflation are expected to remain near 2 per cent throughout the projection period, which should keep the interest hikes at a manageable level.
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