bank canada cpu relevance sept 3rd

CPU currently as at the 3/9/2008 earns the most amount of revenue from the United States followed by Australia, then The U.K followed closely by Canada Hong Kong Germany India South Africa Russia, in that order.--RG
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http://www.financialpost.com/most_popular/story.html?id=766360
TORONTO -- The Bank of Canada held its benchmark interest rate steady at 3% on Wednesday, noting that weakening commodity prices should dampen inflation, and that overall economic conditions in Canada are "significantly better" than those in most major economies.


Falling commodity prices of late have lowered inflationary concerns, the central bank said, easing pricing pressure on consumer items like gasoline and food. At the same time, the level of economic activity in Canada is "slightly lower than expected... but still close to the economy's production capacity," the bank said in its one-page statement.


The decision to hold indicated a neutral stance from the bank, according BMO economist Doug Porter.


"The bank sounds much less concerned about inflation than they were in July, understandably so, with oil prices falling... and growth weaker than they expected," he wrote in a morning note. "Still, there is only a faint hint of concern about the growth outlook." The bank's statement indicated "they are not quite ready to pronounce that the downside risks to inflation are dominant, but they also aren't quite comfortable saying they are balanced either," Mr. Porter said.


It was the third consecutive rate hold from the Bank of Canada in as many announcements. "In a nutshell, they are on hold unless the floor drops out from beneath the economy," Mr. Porter said.


As global economic conditions have weakened over the year, commodity prices have tumbled alongside demand. Commodities are off 16% since the beginning of July alone, led by a sharp decline in the price of crude. The drop has had a deflationary effect, but "given tight inventories, commodity prices can be expected to remain volatile," the bank said. Thus, global concerns "remain elevated" with potential implications for Canada.


As for economic growth at home, "domestic demand has slowed modestly but remains strong," the bank said. "It continues to be supported by financial conditions that remain significantly better than those in most other major economies and by income gains stemming from past improvements in the terms of trade."


Figures released last week put real gross domestic product growth for the second-quarter at 0.3%, up modestly from a first-quarter contraction of 0.8%.


"Given these developments, the bank judges that the current level of the target for the overnight rate remains appropriately accommodative," the bank said.


The noncommittal tone from the bank on Tuesday made it difficult to discern what course it may take at its next rate announcement on Oct. 21, Mr. Porter said, adding that a cut may be coming but only if the economy takes a nosedive.


"On balance, the statement was much less dovish than most anticipated, with only a nod towards a slower growth and lower inflation outlook," Mr. Porter said. "Notably, the bank did not make a call on the balance or risks -- if one looks really hard, there is a hint of a dovish bias, but one would need a microscope to find it.


"It seems that it's going to take much more severe weakening to get the bank talking rate cuts," Mr. Porter said.


Financial Post