The Bank of Canada has decided to keep its current pace of asset purchases, as well as near-zero interest rates in tact, amid poorer than expected economic data.
According to a statement released on Wednesday, Bank of Canada policy makers decided to uphold the historically low policy rate at 0.25% until all economic slack from the Covid-19 pandemic is eliminated. The central bank also announced it will keep its purchases of government bonds at a weekly rate of $2 billion, adding that the pace will likely subside as the recovery gains momentum.
“Decisions regarding future adjustments to the pace of net bond purchases will be guided by Governing Council’s ongoing assessment of the strength and durability of the recovery,” read the bank’s statement. “We will continue to provide the appropriate degree of monetary policy stimulus to support the recovery and achieve the inflation objective.”
The central bank also recognized that the latest series of economic data fared a lot poorer than analysts’ expectations— particularly the latest GDP print, which showed output fell 1.1% in the second quarter against forecasts of 2.5% growth. However, the bank still maintained its confidence in the economy strengthening by the second half of 2021.
The Canadian dollar remained little changed on the news, trading at around $1.265 per US dollar.
Information for this briefing was found via the Bank of Canada. 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.
