The following is excerpted from 17 Apr 2013 article by Reuters Canada.
The Bank of Canada chopped its economic growth forecasts and welcomed signs of a cooler housing market on Wednesday as it left its benchmark lending rate unchanged and said it still expects its next move on interest rates to be up.
The central bank, the only one in the Group of Seven (G7) leading industrialized nations hinting at higher rates, held its main rate at 1 percent, where it has been since September 2010.
In the last Monetary Policy Report it will issue before Governor Mark Carney leaves to head the Bank of England in July, the bank sharply downgraded economic growth expectations and suggested that slack in the economy was still building.
It cut its 2013 growth outlook to 1.5 percent - the same as an International Monetary Fund forecast - from the 2.0 percent it saw in January. It forecast 2.8 percent growth in 2014.
Nonetheless, the central bank said it still expects interest rates to rise, repeating that after a period of time "some modest withdrawal" of monetary stimulus would likely be required….
Carney praised the "constructive evolution of the housing market", and said it will influence interest rates.
One bright spot is the U.S. housing recovery, which the bank projects will boost Canadian export growth by 1 percentage point per year.
The bank said the persistent strength of the Canadian dollar has curbed export growth.
…That means it will take longer for the economy to hit full capacity, and for total and core inflation to rise to the bank's 2 percent target. It now sees this happening by mid-2015, whereas in January it had predicted the second half of 2014...
This article is available in its entirety at: http://ca.reuters.com/article/businessNews/idCABRE93G0KR20130417.