OECD pointers could keep variables low for longer
The Organization for Economic Cooperation and Development recommended the Bank of Canada keep its key interest rate close to zero until the end of 2010 in its most recent economic outlook.
"The Bank of England has lowered policy rates to 1/2 per cent. The Bank of Canada has cut the interest rate to 1/4 per cent, and has also conditionally committed to hold this rate until the end of the second quarter in 2010," the OECD outlook read. "In both countries, the projections warrant keeping the policy rate as close to zero as possible up to end-2010."
The report also said the Bank of Canada likely won't need to resort to other monetary measures to speed up recovery, adding, "the fiscal authorities retain room for further temporary fiscal stimulus should the recovery fail to materialize as expected." Although it didn't predict a swift recovery for Canada, the OECD did reduce its prediction of how much the country's economy will shrink in 2009 to 2.6 per cent, down from three per cent in March and said the GDP will grow by 0.7 per cent in 2010.
In his speech at the International Economic Forum of the Americas on June 11 Bank of Canada governor Mark Carney repeated his commitment to keep the key interest rates low into 2010. The Bank of Canada also recently announced it would extend the use of its temporary facilities to boost financial market liquidity until early next year as opposed to introducing new measures.
OECD pointers could keep variables low for longer
