NEWS

Bank of Canada stands pat on rate as Carney exits

05/29/2013 11:50 EDT | Updated 07/29/2013 05:12 EDT
The Bank of Canada held its benchmark interest rate steady at one per cent today, the last policy decision the bank will make before governor Mark Carney leaves to head the Bank of England.

The bank kept its target for the overnight rate steady at one per cent Wednesday. That's the same level it has been at for 22 consecutive policy meetings, dating back to September 2010.

The central bank's rate is the rate at which retail banks borrow money from each other for short-term loans. It's the basis for the saving and lending rates that they pass on to customers.

In a statement, the bank noted that the Canadian economy performed better than the bank expected in the first part of 2013. But it expects growth to moderate through the year, expanding by about 1.5 per cent as a whole.

That likely isn't enough to compel the bank to raise rates to slow things down and rein in inflation, nor is it sluggish enough to lower the benchmark rate to stimulate the economy further and spur borrowing.

"Consumer spending is expected to grow at a moderate pace, business investment to grow solidly, and residential investment to decline further from historically high levels," the bank said. "Growth in total household credit is slowing and the bank continues to expect that the household debt-to-income ratio will stabilize near current levels."

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