To 1% - the third increase since June. The Bank of Canada's goal is to keep inflation at the 2.0% target, which is expressed in terms of total CPI inflation. Meanwhile, the Federal Funds Rate has had a target range of 0-0.25% since December 2008. Canada's most recent inflation report indicated a rate of 1.9% for July; however, according to a Bank of Montreal economist: “The risk of keeping rates too low for too long is probably a little more pressing in Canada...“You’ve got jobs, you’ve got a healthy banking system, and you’ve got consumers that do still have some capacity to take on more debt. That’s why Canada has to be a little bit more careful, a little bit more pre-emptive, in dealing with interest rates than the other central banks.”
Update, September 8: The Bank of Canada today raised its target for the overnight rate by 0.25% to 1.0%. The Bank stated that: "Any further reduction in monetary policy stimulus would need to be carefully considered in light of the unusual uncertainty surrounding the outlook." Translation: Rates may stay at 1.0% for some time.
