Canada Keeps 1% Rate, Says Increases May Be Appropriate

The Bank of Canada said today higher borrowing costs “may become appropriate,” leading investors to increase bets that policy makers will raise their benchmark rate from 1 percent later this year.

Economic growth and inflation will be faster than earlier forecast, the bank said today in a decision to keep its key rate unchanged for a 13th meeting. The announcement also said the economy will reach full output in the first half of next year, sooner than a January forecast for the third quarter of 2013, while Europe will emerge from recession later this year and the U.S. recovery will be stronger than expected.