Connect with us

Hi, what are you looking for?


Bank of Canada maintains key lending rate at 1 percent

OTTAWA, Apr 12 – Canada\’s central bank maintained its key lending rate at one percent Tuesday, noting inflation was largely subdued despite stronger than anticipated economic growth.

The Bank of Canada said aggregate demand is "rebalancing" toward business investment and net exports, and away from government and household expenditures.

Canadian business investment will continue to rise rapidly and consumer spending will evolve in line with personal disposable income, it forecast.

In contrast, growth in exports is expected to be further restrained by ongoing competitiveness challenges reinforced by the recent strength of the Canadian dollar.

"The persistent strength of the Canadian dollar could create even greater headwinds for the Canadian economy, putting additional downward pressure on inflation through weaker-than-expected net exports and larger declines in import prices," the central bank said.

Overall, the Canadian economy is now expected to grow by 2.9 percent in 2011 and 2.6 percent in 2012, followed by 2.1 percent in 2013.

The global economic recovery, meanwhile, is becoming "more firmly entrenched" and would likely continue at a steady pace, the bank said.

Growth in the United States — Canada\’s largest trading partner — was solidifying but slow due to high government and household debt levels.

Europe has posted gains despite its sovereign debt and banking woes.

Advertisement. Scroll to continue reading.

And the disasters that struck Japan in March will "severely" curtail its economic growth in the first half of this year, creating short-term supply chain disruptions in advanced economies, Canada\’s central bank predicted.

Robust demand in emerging market economies and supply shocks arising from recent geopolitical events boosted commodity prices. This contributed to the emergence of "broader global inflationary pressures."

But global financial conditions remain very stimulative and investors have become noticeably less risk averse, the bank noted.

Click to comment

More on Capital Business

Executive Lifestyle

NAIROBI, Kenya, Mar 12 – The country’s super wealthy individuals are increasing their holding of bonds, gold and cash, a new report by Knight...

Ask Kirubi

NAIROBI, Kenya, Mar 9 – Businessman and industrialist Dr. Chris Kirubi has urged members of the public to exercise extreme caution when making any...

Ask Kirubi

NAIROBI, Kenya, Mar 24 – Businessman and industrialist Dr. Chris Kirubi is set to own half of Centum Investment Company PLC, following a go-ahead...

Ask Kirubi

It is without a doubt that the COVID-19 pandemic has caught the whole world by surprise. Although its full impact is yet to be...


NAIROBI, Kenya, Jun17 – Kenya’s tea leaves manufacturer Kericho Gold, has been awarded the Superbrands Seal by Superbrands East Africa for their quality variety...


NAIROBI, Kenya, Mar 18 – Commercial Banks have been ordered to provide relief to borrowers on their personal loans, with loans eligible from March...


NAIROBI, Kenya, Apr 13 – As the local telecommunications industry gears up to roll out 5G networks in the country, the Communications Authority of...


NAIROBI, Kenya, Mar 22 – Airtel Kenya is offering free internet access for students in order to enable continued learning at home in the...