Bank of Canada Upholds Commitment to Keep Overnight Rate Unchanged Until 2023

The Bank of Canada reiterated its stance on keeping interest rates historically low in order to support Canada’s economic recovery amid a resurgence of infections and resulting lockdowns.

On Wednesday, policy makers at Canada’s central bank decided to keep the overnight rate at 0.25%, while restating the promise to keep borrowing costs subdued until the economic damage from the pandemic is fully corrected. The bank does not anticipate that a complete economic recovery will occur until at least 2023, and as a result, also pledged to continue buying Canadian government bonds to the tune of at least $4 billion per week. However, the BoC did indicate that it could scale back the weekly purchases in the event that the recovery makes more headway.

The BoC also held off from initiating any new policy changes until more clarity emerges in terms of vaccination effectiveness, suggesting that officials remain optimistic regarding the trajectory of the economic recovery. Following the news, the Canadian dollar rose nearly 10% against the 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.

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