BOC keeps policy interest rate at one per cent

OTTAWA (CP) — The Bank of Canada is hinting it will need to keep interest rates at super-low levels for a while longer, saying stronger economic growth isn’t in the cards for the country until next year.

As expected, the bank’s policysetting panel headed by governor Mark Carney kept the trendsetting interest rate at one per cent on Wednesday, the same level it’s held for the past two years.

And while Carney left his tightening bias unchanged — meaning the next move will likely be to raise rates — his suggestion that low interest rates are at least partly responsible for keeping Canada’s economic head above water in the face of global turbulence hinted at continuing that policy.

“In Canada, while global headwinds continue to restrain eco- nomic activity, underlying momentum remains at a pace roughly in line with the economy’s production potential,” the bank said in an accompanying statement.

“Economic growth is expected to pick up through 2013, with consumption and business investment continuing to be its principal drivers, reflecting very stimulative financial conditions.”

The bank kept the tightening bias language unchanged.

“To the extent that the economic expansion continues and the current excess supply in the economy is gradually absorbed, some modest withdrawal of the present considerable monetary policy stimulus may become appropriate, consistent with achieving the two per cent inflation target over the medium term.”