Bank of Canada Rate Announcement Tomorrow

Since the month of May is coming to an end, here is an update on the Bank of Canada’s interest rate decision set for tomorrow, June 1, 2010.

Both the Globe and Mail and RBC Financial, as well as CTV News, are talking about the 6.1% expansion in the Canadian economy within the last quarter. This expansion is also followed by a 4.9% increase during the final quarter of 2009. In addition, the Canadian gross domestic product has expanded for seven months in a row and has been increasing at the fastest pace since 1999. It seems as though the earlier introduced stimulative monetary and fiscal measures have helped pull the Canadian economy out of the recent recession.

With these statistics, the Bank of Canada will gain more reassurance that this economic strength will continue during at least the next quarter, even with the continuing debt crisis in Europe. As a result it is highly likely that the central bank will increase interest rates tomorrow, with the overnight rate expected to rise 0.25 basis points to 0.50%.