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BoC adjusts its growth forecasts upward

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OTTAWA -- The Bank of Canada suggested Tuesday it is increasingly confident about an economic recovery and credit conditions, and as a result adjusted its growth forecast upward for this year and next.

The central bank cautioned, though, that the recovery was in its early stages, or "nascent." Further, it said the rising Canadian dollar was "significantly" holding back the pace of economic growth.

One analyst interpreted the bank`s take on the recovery as a declaration that the recession might be history.

"The bank goes as far as to assert that `recovery is nascent,` which I guess means the recession is over in the Bank of Canada`s mind," said Michael Gregory, senior economist at BMO Capital Markets.

Also Tuesday, the central bank said it would reduce the amount of financing it makes available to market players through special transactions. Analysts say this is a signal the Bank of Canada is comfortable with credit conditions in the country.

"The unconventional policies will gradually roll off the books and perhaps be terminated over the duration of this year because the private-sector markets have demonstrated their ability to stand on their own two feet when it comes to raising funds on better terms, and better pricing, and with fewer concessions than a few months ago," said Derek Holt, vice-president of economics at Scotia Capital.





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