Bank of Canada remains upbeat; keeps overnight rate at 4.25%

The Bank of Canada held its key overnight interest rate unchanged at 4.25% yesterday, as expected, and shrugged off recent market volatility to say its upbeat outlook on 2007 remained unchanged. It made no suggestion of future rate moves in a statement that was devoid of nuance, suggesting it will keep monetary policy idle for some time to come. "The Bank of Canada is very happy where things are, given all the uncertainties not only on the economic front but also on the financial market front as well," said Michael Gregory, senior economist at BMO Capital Markets. "When in doubt, do nothing. That's the new mantra of monetary policy around the world, not only from the Bank of Canada." Primary securities dealers surveyed by Reuters last week had unanimously predicted the central bank would leave interest rates unchanged at this and the next two decision dates on April 24 and May 29. The bank has held rates steady six times in a row following seven hikes ending in May, 2006. The institution's outlook for inflation and growth remained unchanged from its Jan. 18 Monetary Policy Report Update.

(Source: National Post)