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The Bank of Canada building in Ottawa.
The Bank of Canada building in Ottawa.
(Chris Wattie/Reuters)

OECD prescription for Canadian interest rates would risk recovery

The Organization for Economic Co-operation and Development generally agrees with the Bank of Canada about the pace of Canada’s economic recovery. But the two institutions disagree markedly on what Canada’s central bank should do about it.

In its latest world economic outlook released Tuesday, the OECD projected that the excess capacity in the Canadian economy won’t be absorbed until the end of 2015 – precisely the timing the Bank of Canada outlined in last month’s monetary policy report. Both the OECD and the central bank see Canada’s inflation rate by that time rising to 2 per cent, the long-standing target on which the bank’s monetary policy is anchored.