Bank of Canada lowers target for the overnight rate by 1/4 percentage point to 3 per cent - Bank of Canada
Central bank: boc | Type: statement | Date: 2003-07-15

FOR IMMEDIATE RELEASE
Media Relations
Ottawa, Ontario
July 15, 2003
In recent months, there have been a number of unanticipated developments that bear on the outlook for inflation and economic activity in Canada. Both inflation and inflation expectations have declined more rapidly than the Bank had expected. Near-term domestic economic activity has been undercut by the effects of Severe Acute Respiratory Syndrome (SARS) and an isolated case of Bovine Spongiform Encephalopathy (BSE) in Canada. Foreign demand for Canadian products has also been weaker than earlier anticipated. In addition, the rapid and sizable appreciation of the Canadian dollar against the U.S. currency will tend to have a dampening effect on the demand for tradable Canadian goods and services.
In this context, inflation pressures have eased and more economic slack is opening up in Canada than was previously projected. Today's interest rate reduction will provide support for domestic demand growth, and consequently for levels of aggregate demand consistent with keeping inflation on a track to meet the 2 per cent target over the medium term.
Looking ahead, the Bank still expects that growth in the Canadian economy will strengthen towards the end of 2003 and through 2004, underpinned by domestic demand, by the favourable conditions in capital markets, and by the anticipated rebound in the U.S. economy. An elaboration of the Bank's views on the economy and the outlook for inflation will be provided in the
Monetary Policy Report Update
, to be released this Thursday, 17 July.
Information note:
Content Type(s)
Press releases