Overnight Rate : 0.25% BoC continues to hold its target for the overnight rate @ 0.25%, meeting the consensus estimates. The bank rate is unchanged @ 0.5%, while the deposit rate remains at 0.25%. The output gap will continue to widen through Q3, putting downward pressure on inflation, reported the bank. The unprecedented rapid rise in the CAD could fully offset the recent improvements seen in the financial conditions and consumer and business confidence, stated the bank. The overall risks to the banks inflation projection remain tilted downward as a result of operating at the effective lower band. To achieve the inflation target, the bank expects the overnight rate to remain at this level till the end of Q2 of '10, conditional on the outlook for inflation. The bank reiterated it holds considerable flexibility to conduct of monetary policy at low rates, consistent with the framework it outlined in April's MPR. The next rate announcement will be on July 21.

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