Despite the optimistic trajectory of Canada’s economic recovery, the Bank of Canada once again reiterated its current stance on interest rates and its bond buying program.
According to a statement issued Wednesday, the Bank of Canada will continue to hold the overnight rate at 0.25%, renewing its pledge to keep borrowing costs historically subdued until the economy fully reaches pre-pandemic levels— which isn’t expected until 2023.
The central bank also said it will remain committed to bond purchases to the tune of at least $4 billion per week, noting that it could reduce the buying program in the event that the economic recovery accelerates past expectations. Although economists were anticipating the Bank of Canada to curtail its dovish stance, bank officials brought attention to ongoing slack in the economy, especially amid continued uncertainty with respect to the evolution of the virus.
“While economic prospects have improved, the Governing Council judges that the recovery continues to require extraordinary monetary policy support,” the central bank noted in its statement. Following the news, the Canadian dollar registered a slight decline, falling by about 0.2% relative to the US dollar.
Information for this briefing was found via the Canadian Press. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.