Bank Of Canada Retains 3 Percent Benchmark Interest Rate; Economists Disappointed

Ottawa, Ontario (AHN) - Despite higher inflation and slower economic growth in Canada, the central bank opted to keep its benchmark interest rate at 3 percent. The announcement made Wednesday did not surprise economists, but they were disappointed by Gov. Mark Carney's failure to indicate if or when the Bank of Canada will reduce rates in the future.

Douglas Porter, deputy chief economist of BMO Capital Markets, complained to the Toronto Star, "There is absolutely no signal here whatsoever they are preparing to cut rates (in the future)."

Derek Holt, economist of Scotia Capital, lamented the Bank of Canada's decision to keep the benchmark rates unchanged. "I think they are misjudging the balance of growth and inflation risks here, signaling that domestic demand is strong when it has been weakening for a year now and the cracks are showing up on every category," Holt told the Toronto Star.

In response to questions over its decision, the Bank of Canada, in a statement, said, "Domestic demand has slowed modestly but remains strong. Overall, the level of economic activity is slightly lower than expected in July but still close to the economy's production capacity."