Bank of Canada holds central rate at 1 pct

Sept. 7, 2011 at 10:49 AM
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OTTAWA, Sept. 7 (UPI) -- Continuing economic uncertainty in the United States and Europe led the Bank of Canada to announce Wednesday its central rate would remain at 1 percent.

"The European sovereign debt crisis has intensified, a broad range of data has signaled slower global growth, and financial market volatility has increased sharply," the bank said in a statement from Ottawa. "Recent (data) show that the U.S. recession was deeper and its recovery has been shallower than previously reported.

"The bank expects that American household spending will be even more subdued in the face of high personal debt burdens, large declines in wealth and tough labor market conditions."

Domestically, the bank said "economic growth stalled in the second quarter," although it was expected to resume at a diminished rate because of lower wealth and incomes.

"Net exports are now expected to remain a major source of weakness, reflecting more modest global demand and ongoing competitiveness challenges, in particular the persistent strength of the Canadian dollar," the bank said.

The Canadian dollar, or loonie, has mostly been above par with the U.S. dollar for about five years.

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