As expected, the Bank of Canada held its interest rate at a low 1% for the 6th term.
Global uncertainty was a big factor in Bank of Canada Governor Mark Carney’s decision. Carney thought it prudent to keep the rate steady amid the sky-high loonie, slow U.S consumer spending, the continued debt crisis in Europe, supply-chain issues from the Japan earthquake and Greece’s possible default.
Economists predict the rate will rise before the year is out, possibly in September.
A low rate carries the risk of rising inflation due to increased consumer borrowing.
An hour after the central bank announced the unchanged interest rate, the loonie went up by more than one cent.