Bank of Canada Keeps Key Rate Unchanged, Sees Growth Picking Up This Year
- The Bank of Canada on Wednesday left its key interest rate unchanged at a record low 0.25%, as expected, and said the economy would "rebound strongly" as vaccinations against COVID-19 picked up.
- The bank reiterated its guidance that rates would remain unchanged until at least the second half of 2022, noting there remained considerable excess in the economy. The bank said while second quarter growth would be hit by measures taken to fight a third wave of coronavirus infections, the longer-term prospects were good.
- "With vaccinations proceeding at a faster pace, and provincial containment restrictions on an easing path over the summer, the Canadian economy is expected to rebound strongly, led by consumer spending," it said in a statement that analysts said did not break much new ground.
- The central bank plans to maintain its current policy of quantitative easing. It is aiming to buy C$3Bn of government bonds a week as part of attempts to aid the recovery.
- Overall inflation would likely remain at 3% through the summer, above the bank's 2% target, before easing later in the year, the bank said. Measures of core inflation had also risen due primarily to temporary factors, the Bank noted.