Amid an improved outlook for both the domestic economy and the global financial system and the Bank of Canada announced that it will hold its target for the overnight rate at the effective lower bound of 0.25%, and that it will be adjusting its weekly net purchases of Government of Canada bonds.
The bank rate has also been kept at 0.5%, and the deposit rate at 0.25%.
“The Bank continues to provide extraordinary forward guidance on the path for the overnight rate, reinforced and supplemented by the Bank’s quantitative easing (QE) program,” the institution said in its announcement. “Effective the week of April 26, weekly net purchases of Government of Canada bonds will be adjusted to a target of $3 billion. This adjustment to the amount of incremental stimulus being added each week reflects the progress made in the economic recovery.”
Canada’s sustained resilience despite the COVID-19 pandemic has called for these steps, although the central bank emphasized that “the recovery remains highly dependent on the evolution of the pandemic and the pace of vaccinations.”
Read more: Finder: Low-rate environment can help Canadians address high debt levels
The BoC projected global GDP to grow by just over 6.75% in 2021, around 4% in 2022, and nearly 3.5% in 2023.
“The recovery in the United States has been particularly strong, owing to fiscal stimulus and rapid vaccine rollouts,” the bank said. “The global recovery has lifted commodity prices, including oil, contributing to the strength of the Canadian dollar.”
However while substantial employment gains in February and March accompanied Canada’s stronger-than-expecteed economic growth in the first quarter, The BoC warned the ‘new lockdowns will pose another setback and the labour market remains difficult for many Canadian especially low wage workers young people and women.”
Read the full article compliments of Mortgage Broker News.