C.D. Howe Institute's Monetary Policy Council Urges Bank of Canada to Raise
Overnight Rate to 0.50 Percent, With Increases to 1.50 in December and 2.50
Percent by May 2011

TORONTO, May 27 /CNW/ - The C.D. Howe Institute's Monetary Policy Council (MPC) today recommended that the Bank of Canada raise its target for the overnight interest rate (the very short-term money-market rate the Bank targets for monetary policy purposes) to 0.50 percent at its next announcement on June 1, 2010. The Council further recommended raising the target to 0.75 percent at the Bank's subsequent announcement in July. The MPC's recommendation for December 2010 was for a target of 1.50 percent and, looking one year ahead, for a target of 2.50 percent in May 2011.

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. Finn Poschmann, the Institute's Vice President, Research, chaired the fifty-fifth meeting of the Council.

For the full announcement go to www.cdhowe.org

For further information: Kristine Gray - phone: [phone], e-mail: [email protected]