Bank of Canada says world economy still full of risks

Ukraine joins the central bank’s list of worries

OTTAWA – Bank of Canada is keeping its low-interest rate policy in place for a while longer, signalling Wednesday that it remains to be convinced the global economy is out of danger — adding Ukraine to its list of worries.

“Volatility in global financial markets has increased somewhat, reflecting buoyant market conditions in most advanced economies and increased risk differentiation among emerging markets,” it said. “More recently, tensions in Ukraine have added to geopolitical uncertainty.”

The central bank kept its overnight policy rate at one per cent in its scheduled announcement date, a setting that has been in place since September 2010.

The low rate has brought Canadian consumers and businesses some of the most attractive borrowing conditions in memory and helped provide economic stimulus following the 2008-9 recession.

The bank’s decision to stay the course was widely expected by markets, which believe the central bank won’t be anxious to raise interest rates, or even signal its intention to do so, for some time.

Economists say part of bank governor Stephen Poloz’s calculation is that maintaining a dovish stance on rates is at least partly responsible for the Canadian dollar’s well below parity with the American dollar in the past few months, which helps him advance his agenda of stimulating export growth and moderately pumping up inflation.

In a statement, the bank’s governing council acknowledged that conditions had improved somewhat from its last release in January.

“On the whole, the fundamental drivers of growth and inflation in Canada continue to strength gradually, as anticipated,” it said.

The fourth quarter growth rate had come in at 2.9 per cent, almost half-a-point better than the bank’s own guess, and at 1.5 per cent, January inflation edged closer to the bank’s target of two per cent.

Poloz had publicly signalled concern when overall inflation fell below one per cent and core inflation remained close to the low end of the Bank of Canada’s range of between 1.0 and 3.0 per cent.

On the housing front, the bank likes what it sees. It said recent data supports its view of a soft-landing scenario, somewhat contradicting a report from a U.S. financial institution this week that predicted prices could fall by 20 per cent. And it believes household debt levels are also stabilizing.

But the bank is not entirely convinced the good news represents a permanent turning point in the outlook. It called low inflation an important downside risk, judging it would remain well below the target for some time. As well, while fourth quarter growth was higher than expected, the first quarter of 2014 will likely be weaker, it said.

Overall, the bank hasn’t changed its mind that 2014 will see a modest 2.5 per cent advance.

Meanwhile, while exports have been stronger, they remain an underperformer in the economy and business investment has yet to pick up, it said.

On top of that, the world remains beset with risks and uncertainty, it cautioned.

Putting it all together, the bank said “the balance of risks remains within the zone for which the current stance of monetary policy is appropriate.”

The next interest rate announcement is scheduled for April 16.




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Bank of Canada says world economy still full of risks

  1. Biggest risk to the world is corrupt western banking printing (electronic counterfeit) too much money to buy debt that no legitimate lender would buy, government debt.

    Currency failure usually ends in war or poverty.

    Cant say the CAD dropping 10 cents so fast is a good sign. Since jobs are driven by affordable exchange of desired and needed goods and service, lower value money means we have less to spend on each others jobs.

    Lets look at the causes of the 2008/9 recession/depression, me, I call it the 2006-20xx bank debt fraud depression as it isn’t over. It really started in 2005/6.

    2005/6 – G8/20 agreed to print money for debt, all devalue the western currencies in unison to fund governemtn debts. Done to force interest rates below real inflation for a negative value money supply. Supported by the following chart:

    http://www.xe.com/currencycharts/?from=USD&to=CNY&view=10Y

    By 2007 credit crisis had developed as savvy investors refuse to lend money at rates below inflation+taxes for a negative value return. Loans came up for renewal, and too many people wanted their money out and not renewing their purchases of debt for a negative value return. Peoples mortgages had nothing to do with it, they were scape goats by crooked government economists. Layoffs start.

    2008 the market crashed as which central banks electronically counterfeited money to buy government bonds and some select big banks, it created a imbalance in banks, less credit and more job losses, the job losses amplified the effect. As people lost jobs, they had less money for mortages and spending on each others jobs.

    2009 Jan-Mar mini recovery, a jobless recovery as it was an inflation driven recovery for the numbers. GDP doesn’t drive jobs, affordable exchange of goods and services drives jobs….we had inflation but not jobs.

    But hey, government loves the propaganda, they looked at a brick wall and hit the gas. They messed up huge to protect government bloat, waste, excess and war. Low, cheap, easy debt for government was more important than the people who support the government.

    The west will not recover until our governments cut their bloat, waste and tax people less. Everyone else but government took the cuts. Starting a war(s) with Libya, Syria, Iran, Russia, China, North Korea…..USA is itching for war to hide the fraud of debt.

  2. The fourth quarter growth rate had come in at 2.9 per cent, almost
    half-a-point better than the bank’s own guess, and at 1.5 per cent,
    January inflation edged closer to the bank’s target of two per cent.

    That is a line of bunk. How can you drop the value of currency (1.00 / 0.90) 11% and figure it isn’t inflationary? And it even dropped more tot he Mexican peso and Asia Yuan….

    2.9% growth is from inflation, not value growth. In fact, 11% – 2.9% means a shrinking value economy. People need to stop thinking of money as having immutable value. In 1971 if you bought 1000 ounces of gold for $35,000, today its worth $1,500,000 CAD. Gold didn’t grow in value, fiat money lost value. Big Mac Meal Deal was 89 cents in 1968, today its $8.90 and our kids will see $89. I call it inflation tax, devaluing money, incomes, pensions, cash, earnings….its why savvy investors no longer invest in money.

    The reason governments haven’t been able to fix the economic problems started in 2005/6 with money print for debt is because it is their corrupt policies causing the issues. Blinded by the greed of debt they ignore that jobs don’t come from GDP, they come from affordable exchange of goods and services. And with hidden, inflationary and realized taxes so high, Canada has become negative value tax-inflated economy of debt fraud.

    Its why I moved 1/2 my assets outside of Canada, to avoid the devaluation of Canada….Even CPP moved 30%+ of its assets offshore…..

    Canada is being devalued for this ponzi fiat debt and currency fraud. Debt is never fraud cheap, free or easy, just depends how and who is going to pay for it.

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