Economy grows, but won’t run fully this year: Bank

OTTAWA — While Vancouver may be spending the coming years trying to pay for Olympic cost overruns, the Bank of Canada announced that the economy grew by 5 percent growth in the 2009 fourth quarter, "spurred by vigorous domestic spending and further recovery in exports."

According to financial reports, the central bank maintained its historically low lending rate of 0.25 percent Tuesday, but added that it’s paying close attention to inflation shifts which could alter the rate the bank committed on before midyear.

In the statement, Bank governor Mark Carney acknowledged that growth and inflation have been hotter than policy makers projected in their January forecast.

Reports suggest, then, that the bank’s next decision on April 20 could "mark the beginning of the end of easy money" and it could begin unleashing a series of rate hikes or raise rates more steeply than the typical 25-basis point increments.

Despite the modest economic growth, Carney tempered overly optimistic expectations by noting that the persistent strength of the Canadian dollar and the low level of U.S. demand continue to anchor down significant economic activity in Canada.
Central bankers have said the economy won’t be running at full tilt until the second half of 2011.