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Bank of Canada deputy gov. says rates may have to be lower than past
Interest rates may have to be about one-and-a-half percentage points lower than they have been historically in order for the Canadian economy to operate at full capacity, a senior Bank of Canada official said on Monday. The central bank estimated that the neutral rate of interest, or the rate at which the economy can work at full capacity with stable inflation, is now seen as 3 percent to 4 percent, down from a range of 4.5 percent to 5.5 percent in the mid-2000s. The BoC's Senior Deputy Governor Carolyn Wilkins noted the fact that potential output will be lower going forward than in the years leading up to the ... (full story)