Wednesday, September 8, 2010

Bank of Canada Announcement

OTTAWA, Sept 8 (Reuters) - The Bank of Canada raised its benchmark interest rate for a third consecutive time on Wednesday by 25 basis points to 1 percent, but cautioned that a weak U.S. economy would hamper Canada's recovery.

The central bank gave no explicit guidance on its next interest rate move in October, saying rates remained "exceptionally stimulative" but keeping the door open to standing pat if necessary due to doubts about the U.S. and global recoveries.

"Any further reduction in monetary policy stimulus would need to be carefully considered in light of the unusual uncertainty surrounding the outlook," it said in a statement.

The language was similar to that used in its last rate announcement on July 20 but omitted any reference to weighing any further rate hikes "against domestic and global economic developments."

Although the bank now sees the Canadian economic recovery as slightly more gradual than it predicted in July, it sees consumption growth remaining solid and business investment rising strongly.

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