Growth and investment expected to remain solid
The Bank of Canada has raised its benchmark interest rates one-quarter point to one per cent. As little as one week ago, analysts were split on whether the Bank would raise interests at all, but by yesterday, markets were predicting a 60 per cent chance of a rate hike. Better than expected U.S. manufacturing and jobs numbers this past week made the rate hike more likely. In a statement today, the central bank said the economic recovery would be “slightly more gradual” than it had earlier predicted, due to slower than anticipated demand in the U.S. However, the bank predicts that domestic demand will be solid and business investment will continue to be strong, justifying the rate hike.