Bank of Canada keeps policy unchanged

As widely expected, the Bank of Canada announced it is maintaining its monetary policy unchanged, with the target for the overnight rate at 0.5%. The Bank Rate is correspondingly 0.75%and the deposit rate is 0.25%.

The BoC said it continues to anticipate a strong rebound in the second half of the year despite a disappointing second quarter. "While Canada's economy shrank in the second quarter, the Bank still projects a substantial rebound in the second half of this year," the BoC said in a statement.

“On balance, risks to the profile for inflation have tilted somewhat to the downside since July. At the same time, while there are preliminary signs of a possible moderation in the Vancouver housing market, financial vulnerabilities associated with household imbalances remain elevated and continue to rise”, BoC stated. “The Bank’s Governing Council judges that the overall balance of risks remains within the zone for which the current stance of monetary policy is appropriate, and the target for the overnight rate remains at 1/2 per cent.”