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Bank of Canada leaves interest rate unchanged at 0.75%

Published 05/27/2015, 10:07 AM
Updated 05/27/2015, 10:07 AM
© Reuters. Bank of Canada leaves interest rate unchanged at 0.75%

Investing.com - The Bank of Canada kept its benchmark interest rate on hold in May and said that the assessment of risks to the inflation profile has not materially changed since April, it announced on Wednesday.

The BoC said it was leaving its overnight cash rate unchanged at 0.75%, in line with expectations.

The bank said in a statement that the Canadian dollar has strengthened in recent weeks in the context of higher oil prices and a softer U.S. dollar. If these developments are sustained, their net effect will need to be assessed as more data become available in the months ahead.

Total inflation is near the bottom of the bank's 1%-to-3% inflation control range, largely due to the transitory effects of sharply lower energy prices. Core inflation remains above 2%, boosted by the pass-through effects of past depreciation of the Canadian dollar, as well as certain sector-specific factors.

Seeing through the various temporary factors, the BoC estimates that the underlying trend of inflation is 1.6% to 1.8%, consistent with persistent slack in the economy.

The outlook for the Canadian economy also remains largely in line with the outlook from April. Recent indicators suggest consumption in Canada is holding up relatively well, given the impact of lower oil prices on gross domestic income.

In conclusion, policymakers judged that "the current degree of monetary policy stimulus is still appropriate."

USD/CAD was trading at 1.2453 from around 1.2437 ahead of the announcement.

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