The Bank of Canada is keeping its benchmark overnight rate at one per cent for a little while longer.
The bank says Canada’s economy is performing slightly better than expected at the moment, but that will soon change.
Citing a deeper than predicted recession in Europe, spillover effects from a weaker U.S. economy and slowing growth in China, the central bank says Canada is facing considerable headwinds from beyond its borders.
The bank says Canada’s gross domestic output will be weakened by these factors going forward.
The central bank says inflation is higher than it would like at the moment, but it expects that will decline as food and energy prices moderate.
The overnight rate is used as a benchmark for bank prime lending rates and usually affects the cost of such loans as lines of credit, business loans and variable-rate mortgages.