Why the Bank of Canada Didn't Raise Rates Today

March 2, 2010 by Gordon McCallum

No surprise this morning from the Bank of Canada, which I had earlier predicted.

The main reasons cited for not increasing rates are:

1. Risks of inflation are “roughly balanced”.
2. The high Canadian dollar and soft demand from the U.S. are slowing down economic growth in Canada (despite a very strong 5% growth in GDP in Q4 last year)
3. They’re waiting until July just like they said they would.
4. It’s still too soon. If the BoC raises rates before July then it’s possible people and markets will overreact. I think stability and predictability is what the Bank is shooting for here.