The Bank of Canada thinks Canadian growth is even faster than expected! Consumer confidence is higher. Cry me a river opposition coalition.
The Bank of Canada left its key overnight interest rate unchanged at a meeting on Tuesday, though said the pace of Canadian growth has been stronger than expected.
The target for the overnight rate remains at 1%. Most economists had expected the bank to stand pat, with most still forecasting rates to remain on hold until July.
The bank said business investment and exports are taking over from consumer spending as the main drivers of economic growth. Though it warned the strong loonie will provide some headwinds to trade.
Overall, the bank projects the economy will expand by 2.9% in 2011 and 2.6% in 2012. Growth in 2013 is expected to equal that of potential output, at 2.1%.
The bank expects the economy will return to capacity in the middle of 2012, two quarters earlier than had been projected in the January monetary policy report.
The Organization for Economic Cooperation and Development has forecast Canada will be the strongest economy in the G7 group of industrialized nations this year, helped by booming commodity prices.