C.D. Howe Institute's Monetary Policy Council Urges Bank of Canada to Hold Overnight Rate at 1.00 Percent

TORONTO, Oct. 18, 2012 /CNW/ - The C.D. Howe Institute's Monetary Policy Council (MPC) today recommended that the Bank of Canada maintain its target for the overnight rate, the very short-term interest rate it targets for monetary policy purposes, at 1.00 percent at its next announcement on October 23, 2012. The Council further recommended that the Bank hold the overnight rate target at 1.00 through April of 2013, and called for a target of 1.50 percent by October of next year.

The MPC is a panel sponsored by the C.D. Howe Institute to provide an independent assessment of the monetary stance most appropriate for the Bank of Canada as it seeks to achieve its 2 percent inflation target. William Robson, the Institute's President and CEO, chairs the Council.

The MPC makes formal recommendations - its median vote - for the Bank of Canada's upcoming rate announcement, the subsequent announcement, the announcement in six months' time, and the announcement in one year's time. Nine of the members attending the meeting called for a 1.00 percent target at the upcoming setting and one called for 0.75 percent target, and the calls for the next announcement in December were the same. By April 2013, four members had raised their recommendations to the 1.25-to-1.50 range, and by October 2013, the recommendations ranged from 1.00 to 2.00 percent.

SOURCE: C.D. Howe Institute

Kristine Gray
Executive Assistant to the Vice President, Research
and Senior Coordinator, Research

C.D. Howe Institute
300-67 Yonge Street, Toronto, M5E 1J8
Phone: [phone]x2606 or 416-367-2606 (Direct); Fax [phone]