Canadian Manufacturing

BoC holds interest rate at 1%

Canada's economic health has been offset by risks such as sliding oil prices and high household debt



OTTAWA—The Bank of Canada is keeping its trend-setting interest rate at one per cent, even as the Canadian economy shows signs of a broadening recovery.

The central bank says improvements to Canada’s economic health have been offset by risks such as sliding oil prices and high household debt.

In its rate announcement, the bank says inflation has climbed faster than expected due to the temporary effects of a lower Canadian dollar and price jumps in certain consumer sectors.

The bank says Canadian exports have picked up amid disappointing global growth thanks to an improved U.S. economy—a boost that has also led to more business investment and jobs in Canada.

The document says the output gap appears to be smaller than the bank had predicted in its October monetary policy report due to the recent changes.

The country’s overnight interest rate hasn’t budged since September 2010, keeping borrowing rates at historic lows.

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