Canada and Australia, two resource-rich nations that are recovering quickly from the global recession, yesterday (Tuesday) reaffirmed interest rate policies as both promised to remain vigilant about rising inflation.
The Reserve Bank of Australia (RBA) raised its cash rate target by a quarter of a percentage point to 4.00%, while the Bank of Canada (BOC) kept its benchmark interest rate at record lows. Both central banks said inflation and economic output have been higher than policymakers expected.
The target rate for overnight loans between commercial banks in Canada will remain at 0.25%, the same level it's been since April 2009, exactly in line with predictions by 22 economists surveyed by Bloomberg News. The central bank also repeated a pledge to leave it unchanged through June unless the current inflation outlook shifts.