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Bank Rate Raised in Response to Persistent Weakness in the Canadian Dollar

The Bank of Canada today raised the Bank Rate by 1/4 of one percentage point to 4 per cent. The Bank's operating band for the overnight rate was similarly adjusted.

Persistent weakness in the Canadian dollar since late October has resulted in a further easing in monetary conditions that were already highly stimulative. Given the underlying strength in the Canadian economy and the aim of having monetary conditions that support a long-lasting expansion, this further easing is inappropriate. Currency weakness may also put at risk the sustainability of the low level of Canadian medium-and longer-term interest rates compared to those in the United States.

This action is designed to counter the excessive easing in monetary conditions and to provide support for the Canadian dollar.

Content Type(s): Press, Press releases