OTTAWA, July 20 (Xinhua) -- The Bank of Canada raised its benchmark interest rate by 25 basis points to 0.75 per cent on Tuesday, following closely the first hike on June 1 since April 2009.
The Bank said in a press release that economic activity in Canada is unfolding largely as expected, led by government and consumer spending.
Housing activity is declining markedly from high levels, consistent with the bank's view that policy stimulus resulted in household expenditures being brought forward into late 2009 and early 2010.
While employment growth has resumed, business investment appears to be held back by global uncertainties and has yet to recover from its sharp contraction during the recession.
The bank expected the economic recovery in Canada to be more gradual than it had projected in its previous outlook in April, with growth of 3.5 percent in 2010, 2.9 percent in 2011, and 2.2 percent in 2012.
This revision reflects a slightly weaker profile for global economic growth and more modest consumption growth in Canada.
The bank said that this decision left considerable monetary stimulus in place, consistent with achieving the 2 percent inflation target in light of the significant excess supply in Canada, the strength of domestic spending, and the uneven global recovery.
"Given the considerable uncertainty surrounding the outlook, any further reduction of monetary stimulus would have to be weighed carefully against domestic and global economic developments," said the Bank.