Bank of Canada keeps key interest rate at 1%

The Bank of Canada has held its prime interest rate at an ultra-low 1 per cent since 2010 in an effort to spur lending and maintain economic growth. Canadian Press

The Bank of Canada is keeping its trendsetting, overnight interest rate at one per cent, where it has been since September 2010. It also made no changes to its neutral bias stance, meaning it believes the next policy move could equally be either a hike in rates or a cut.

Canada’s central bank says the current super-low interest rate is appropriate for the Canadian economy.

READ MORE: 5 things to know about interest rates right now 

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The bank says the economy grew a little more, and inflation was a little higher, than it anticipated in the final quarter of 2013.

Still, economic growth isn’t exactly roaring, while price wars between big retailers like Walmart, Loblaw and Canadian Tire will keep inflation below the central bank’s target or 2 per cent inflation — its ideal target to maintain healthy economic conditions.

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“Excess supply in the economy and competition in the retail sector will likely keep inflation well below the 2 per cent target this year,” the BoC said in a statement.

READ MORE: Walmart makes bigger push into grocery aisle

The Bank of Canada also cautioned that the global and domestic landscape remain beset by risks that could have an negative impact on Canada’s economy.

“More recently, tensions in Ukraine have added to geopolitical uncertainty,” the central bank said.

READ MORE: 3 ways Russia-Ukraine conflict could hit your pocketbook 

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