Canada Keeps Key Rate at 1%; Stimulus ‘Will Be Withdrawn’

The Bank of Canada kept its main interest rate unchanged and said borrowing costs will increase as the economy recovers, with policy makers dropping the word “eventually” to describe the timing of their next move.

The target for overnight loans between commercial banks remained 1 percent, where it’s been since September, as forecast by all 26 economists surveyed by Bloomberg News. The Ottawa-based bank also raised its outlook for so-called core inflation and affirmed the economy will reach full output by the middle of 2012 while trimming this year’s growth forecast.