Canada strikes a bearish note as it chooses to keep policy rates on hold, saying “any further reduction in monetary policy stimulus would need to be carefully considered”. So the target for the overnight rate stays at 1 per cent; the bank rate at 1.25 per cent and the deposit rate at 0.75 per cent.
In an “environment of significant excess supply,” says the Bank, “considerable monetary stimulus” is still required for inflation to reach its target of 2 per cent +/- 1 per cent. Headline inflation was exactly on target at 2 per cent y-o-y in the most recent November data, but it does not yet appear stable. Rather, it fell from 2.4 per cent the previous month. Core inflation, which strips out volatile components such as energy, is trailing behind its 2 per cent target at 1.4 per cent.