Canada’s central bank keeps interest rate at 1.0 %

 

 OTTAWA (AFP) - Canada s central bank on Wednesday held its key interest rate at 1.0 percent, saying the global economy will grow "modestly" in 2013.

The Bank of Canada pointed to "modest" upticks in the US and Japanese economies, but also a slowdown in China s growth weighing on commodity prices and a recession in Europe that are creating a drag on Canadian exports.

"The bank continues to expect global economic activity to grow modestly in 2013 before strengthening over the following two years," it said.

In Canada, first quarter growth was stronger than the bank projected in April, while inflation has been slightly weaker.

Going forward, the bank forecast consumer spending to grow at a "moderate pace," while business investment grows "solidly," and residential investment declines further from historically high levels.

Canada s household debt-to-income ratio, meanwhile, will stabilize near current levels, it said. And exports are projected to continue to recover, but will be restrained by subdued foreign demand and the high value of the Canadian dollar.

"With continued slack in the Canadian economy, the muted outlook for inflation, and the constructive evolution of imbalances in the household sector, the considerable monetary policy stimulus currently in place will likely remain appropriate for a period of time," the bank concluded.