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Related Links: National Archive 2002 Archive January 2002 February 2002 March 2002 April 2002 May 2002 June 2002 July 2002 August 2002 September 2002 October 2002 November 2002 December 2002    |
 
Bank of Canada raises overnight rate target by 1/4 percentage point to 2 3/4 per centOTTAWA, Ontario, July 16, 2002 — The Bank of Canada today announced that it is raising its target for the overnight rate by one-quarter of one percentage point to 2 3/4 per cent. The operating band for the overnight rate is correspondingly increased, and the Bank Rate is now 3 per cent. Since the Bank's last interest rate announcement on 4 June, the economic recovery in Canada has remained stronger than expected and has broadened across sectors. This momentum has been reflected in continued strong growth in employment and spending by households, as well as in some pickup of investment in machinery and equipment. As a result, the economy has been moving towards full production capacity more quickly than anticipated. Core inflation, which was 2.2 per cent in May, has remained a little higher than projected. There are both positive and negative risks to the Canadian economic outlook. On the positive side, with considerable monetary stimulus in the economy, growth in Canada could very well continue to exceed expectations. On the negative side, the main risk is the marked uncertainty associated with recent global corporate and financial market developments and their potential effects on confidence and world economic growth. The Bank's decision to raise interest rates represents a further measured reduction in the substantial amount of monetary stimulus in the economy. In the period ahead, the Bank will remain focused on taking the necessary actions to achieve the inflation target of 2 per cent over the medium term. Information note: Contact: News source: Bank of Canada
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