UPDATE 3-Bank of Canada lays out conditions for steady rates

Wed Jul 17, 2013 2:15pm EDT
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* Says rates on hold as long as three conditions met

* Poloz says was never intent to signal imminent tightening

* Drops reference to "persistent strength" of C$

* Analysts expect Poloz policy to maintain status quo

By Randall Palmer and Louise Egan

OTTAWA, July 17 (Reuters) - The Bank of Canada said on Wednesday it will hold its benchmark interest rate steady at 1 percent while the economy remains fragile and inflation stays low, but that it sees rates rising if the economy performs in line with expectations.

The policy announcement, the first under new Governor Stephen Poloz, delivered roughly the same message as those of his predecessor, Mark Carney, over the past year: The next move is a rate hike, not a cut, although it won't be any time soon.

Still, Poloz, who took over at the helm of the central bank in June, was more explicit in stating that the continuation of steady rates depended on three key trends.

"As long as there is significant slack in the Canadian economy, the inflation outlook remains muted, and imbalances in the household sector continue to evolve constructively, the considerable monetary policy stimulus currently in place will remain appropriate," Poloz said at a news conference to announce the bank's decision.   Continued...