Bank of Canada Pledges to Keep Interest Rates Unchanged Until 2023, Will Continue with Current Pace of Bond Purchases

The Bank of Canada (BOC) has announced it will continue to hold interest rates steady for the foreseeable future, as well as keep purchasing government bonds at its current pace, suggesting that Canada’s economic recovery is still subject to uncertainty and volatility.

The BOC has recently re-affirmed its position to keep its benchmark rate at 0.25% until a large portion of spare economic capacity is eliminated, but stopped short of implementing more aggressive stimulus action. However, the central bank did acknowledge that it will continue to purchase government bonds at the current rate. Moreover, BOC Governor Tiff Macklem stated that further quantitative easing will be calibrated, suggesting that the central bank plans to reduce purchases prior to lifting its forward guidance on rates.

The Bank of Canada obscured some of the details of its intentions regarding the modification of its quantitative easing program, as a means of preventing yields from suddenly rising. Unlike the US Federal Reserve, which has been generously purchasing an assortment of debt, the BOC is refraining from owning substantial shares of outstanding issues. However, BOC’s latest statement serves as a means of initiating additional optimism into Canada’s economy, as investment and business confidence still remains significantly below pre-pandemic levels.

Information for this briefing was found via 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.

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