ABC - Current Industry News
Economy hotter than estimated, Bank of Canada says
2010-03-04 - Globe and Mail
The Bank of Canada kept its benchmark lending rate at a historic low of 0.25 per cent Tuesday, while hinting that policy makers are on closer watch for shifts in the inflation outlook that might force them to rethink their pledge to stay on hold through mid-year.
In the statement accompanying Tuesday's decision, Governor Mark Carney and his rate-setting panel acknowledged that growth and inflation have been hotter than policy makers estimated in their January forecast, saying the economy's 5-per-cent growth in the fourth quarter was spurred by vigorous domestic spending and further recovery in exports.
Also, in a nod to the fact that readings of core inflation, which exclude volatile items, came at the central bank's 2-per-cent target in January, sooner than policy makers had anticipated, they struck a somewhat more hawkish tone on price gains. The central bank said the risks to their inflation outlook are now roughly balanced as opposed to language from previous statements that had said the risks were lower.