Tuesday, October 25, 2011

With little doubt about interest rate, analysts look to Carney's call on economy

By The Canadian Press



OTTAWA - The Bank of Canada is expected to continue setting the conditions for economic recovery today by passing again on interest rate hikes.



Most economists and markets agree that governor Mark Carney will leave the rate at one per cent until the end of the year and likely well into 2012 or longer.



And, any thought Carney might have had of cutting the rate likely went out the window last week when Statistics Canada reported inflation rose to 3.2 per cent in September, above the bank's one-to-three per cent acceptable range.



TD Bank chief economist Craig Alexander says with uncertainty over Europe's debt issues high, and the U.S. economy still stumbling, the Canadian central bank is in wait and see mode for some time.



He says of greater interest today is what Carney will say about future prospects for the Canadian economy.



A few weeks ago, the bank was expected to dramatically downgrade its official growth projections of 2.8 and 2.6 per cent for this year and next. But with economic data coming in better-than-expected in recent weeks, including last month's surprising 61,000 jobs gain, the bank may not be as glum about prospects going forward.

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