Once again and as widely expected the Bank of Canada left its overnight rate unchanged at 1% (3% bank prime rate) for a 3rd consecutive meeting. We are seeing the economy recover at a somewhat faster pace that originally anticipated, but the risks are still elevated, due to concerns of the pace of recovery in the EU as well as the continued strength of the Canadian dollar.
Yesterdays decision to decrease the amortization of all insured mortgages to 30 years from 35 also made the decision easy to maintain the overnight rate at 1%.
The BoC projects a 2.4% increase in the economy in 2011 and a 2.8% in 2012, with a full return to capacity a by the end of 2012. The BoC's next fixed rate announcement is only 6 weeks away on March 1st.
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