Bank of Canada says first quarter better than expected; 2013 forecast unchanged

OTTAWA – The Bank of Canada is keeping its trendsetting interest rate at one per cent while continuing to proclaim that it will go up at some point.

The central bank also says the Canadian economy performed better at the start of 2013 than it had anticipated.

But it still expects that growth will be moderate for the year as a whole, broadly in line with its April forecast of 1.5 per cent.

And it says inflation has been weaker than it expected, suggesting no urgent need to increase borrowing costs on consumers and businesses.

It’s the central bank’s last policy pronouncement under governor Mark Carney, who is leaving to take on a similar role at the Bank of England.

Some analysts had speculated the outgoing Carney might adjust the forward looking guidance as his final public act with the Canadian bank, but the statement released Wednesday showed no such inclination.

The bank continues to say the current policy stance, which has been in place since September 2010, will likely be appropriate for some additional time, after which Canadians should look for a modest increase in interest rates.