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BoC holds interest rate at 1% in October

FXStreet (Łódź) - As widely expected, the Bank of Canada decided to maintain its target for the overnight rate unchanged at 1% at its October monetary policy meeting. The bank rate remained at 1.25% and the deposit rate at 0.75%, respectively.

In a statement released after the decision was made known, the BoC suggested that even though core inflation rose more sharply than projected, total CPI is evolving broadly in line with forecasts. It pointed to the threats to the global economy such as geopolitical tensions and decline in confidence and stressed that growth in most economies is dependent on unconventional stimulus measures.

As far as Canadian GDP is concerned, the BoC projects a 2.5% growth in 2015 and a slowdown to 2% by the end of 2016. "As global headwinds recede, confidence in the sustainability of domestic and global demand should improve and business investment should pick up," the central bank said.

Therefore the BoC decided that “the risks to its inflation projection are roughly balanced," while " the financial stability risks associated with household imbalances are edging higher."
"Overall, the balance of risks falls within the zone for which the current stance of monetary policy is appropriate and therefore the target for the overnight rate remains at 1 per cent.”

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