Canada leaves rate unchanged

AP News
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Posted: Oct 19, 2010 10:13 AM
Canada leaves rate unchanged

Canada's central bank left its key interest rate unchanged on Tuesday after three consecutive rate hikes and cut its economic growth projections for this year and next.

The Bank of Canada, which held its benchmark rate at 1 percent, said Canada's economic outlook has changed and expects the recovery to be more gradual than it projected in July.

Canada's dollar plunged more than two cents to 96.52 U.S. cents.

In June, Canada became the first Group of Seven nation to raise interest rates since the global economic crisis. It raised rates again in July and September.

Most economists had expected central bank Governor Mark Carney to leave the rate unchanged. Australia and Brazil, two other commodity-weighted economies, also kept rates unchanged recently.

The bank said it now believes Canada's economy will likely grow about 3 percent this year instead of the 3.5 percent it had predicted in July. It also predicted moderate growth of 2.3 percent next year, six-tenths of a point lower than previously projected.

The bank said the global economic recovery is entering a new phase where fiscal stimulus will shift to fiscal consolidation. It said global unemployment and ongoing deleveraging will moderate growth.

"This more modest growth profile reflects a more gradual global recovery and a more subdued profile for household spending," the bank said.