(22 April 2010 – Global) The Bank of Canada held its key interest rate steady at 0.25 percent earlier this week, however has abandoned its conditional pledge to continue with the emergency rate at further policy meetings.Speculation is now rife, due to surprisingly high inflation and growth data, that the nation’s key interest rate could be hiked earlier than expected, making Canada the first of the G7 to move away from emergency levels.
The Bank of Canada said in a statement that recent improvements in the economic outlook, the need for such extraordinary policy is now passing, and it is appropriate to begin to lessen the degree of monetary stimulus.
The extent and timing will depend on the outlook for economic activity and inflation, and will be consistent with achieving the 2 percent inflation target, the central bank said.
The central bank is due to meet next over the nation’s key rate on June 1st and then July 20.
Many analysts had forecast rates to remain steady until July as the central bank had previously said that it would not make any changes to interest rates until the end of the second quarter, unless inflation strayed off course.
However most of have now reviewed their position from a July hike to a June hike after the bank’s recent comments.