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Prime Rate Remains at 3%

Prime Rate Remains at 3%

Bank-of-Canada-Benchmark-RateThe Bank of Canada left its key lending rate unchanged today, in keeping with widespread expectations.

This implies the prime rate will remain at 3%, where it’s held since September.

Here are highlights from the BoC’s statement this morning:

* “The global economic recovery is proceeding at a somewhat faster pace than the Bank had anticipated.”

* “Stretched household balance sheets are expected to restrain the pace of consumption growth and residential investment.”
* “…business investment will likely continue to rebound strongly.”
* “…the economy will return to full capacity by the end of 2012.”

The Bank also lifted its 2011 growth estimate from 2.3% to 2.4%.

The next BoC rate meeting is 42 days from now on March 1. The price of assets based on the overnight target rate suggests there’s just a 31% chance of a rate hike at this meeting.

The Bank’s Monetary Policy Update comes out tomorrow. This should give us a more detailed picture of the BoC’s expectations for inflation.

Source: MyMortgage newsletter