BoC BOOSTS GROWTH OUTLOOK, HOLDS RATE

Apr 13, 2016

By Bob Komsic

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The Bank of Canada says Ottawa’s multi-billion dollar spending boost in its recent budget turned what would have been a modest downgrade to this year’s growth forecast into an upgrade.
Bank of Canada
The central bank said in its latest quarterly Monetary Policy Report, ”the effects of recently announced fiscal measures will begin to be felt in 2016 and will build through 2017.”
The bank estimates measures announced in the Trudeau government’s maiden budget last month – including roughly $25-billion over two years – will more than offset the negative consequences of a slightly stronger dollar, weaker foreign demand and shrinking investment in the oil sector.
It’s now predicting the economy will grow by 1.7% this year, up from its January forecast of 1.4%.
But even with the increased federal spending, the bank’s lowered its 2017 growth projection from 2.4% to 2.3%.
The Bank of Canada also announced it was keeping its key overnight interest rate at 0.5% – where it’s been since two rate cuts last year.
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