The Canadian central bank’s benchmark rate was raised to 0.75 percent, from 0.5 percent. The Bank of Canada (BOC) said the acceleration in growth, and its broadening to more sectors and regions, has increased its “confidence” the economy will continue to grow above potential, meaning excess capacity is being absorbed.
“Governing Council judges that the current outlook warrants today’s withdrawal of some of the monetary policy stimulus in the economy. Future adjustments to the target for the overnight rate will be guided by incoming data as they inform the Bank’s inflation outlook, keeping in mind continued uncertainty and financial system vulnerabilities,” it said in the statement.
No forecasts for a future interest rate increase
Governor Stephen Poloz said that “what the recovery suggests to us is that the interest rate cuts that we put in place in 2015 have largely done their work.” Asked if rates could be raised again later this year, Stephen Poloz says will not make forecasts. The forecasts for exports and investment are very, very prudent. “Were very disappointed in Q1 export data, but recent data more encouraging. We think there's still some room to grow once output gap closes.”, said Poloz.