Bank of Canada keeps key rate at 0.25%
In its updated outlook, the bank expects the economy to contract by 7.8 per cent this year.The central bank’s report pegs the annual inflation rate at 0.6 per cent this year, rising to 1.2 per cent in 2021 and 1.7 per cent in 2022.Its inflation target is 2 per cent, and the bank says it will maintain the current rate until that target is achieved.
The forecasts come with a caution that the numbers could be thrown off if there is a severe second wave of the novel coronavirus, for instance.2nd coronavirus wave could have ‘serious impact’ on economy, Bank of Canada says In a statement announcing the decision, the bank says the rate will have to stay low to provide “extraordinary monetary policy support” to help recuperate from the economic impact of COVID-19.
The central bank also says it will continue to snap up federal bonds at a rate of $5 billion per week to keep interest rates low across the yield curve.
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