The Bank of Canada has announced that it will be keeping its key interest rate at 0.25% until at least June 2024. This decision was made in light of the ongoing COVID-19 pandemic and its impact on the Canadian economy.
In a statement released on Wednesday, the central bank stated that while the Canadian economy is recovering from the effects of the pandemic, there are still significant risks and uncertainties that could hinder its progress. These include the emergence of new variants of the virus and potential setbacks in the global economic recovery.
The Bank of Canada also noted that inflation has risen to 3.6% in May, which is higher than expected. However, this increase is largely due to temporary factors such as higher gasoline prices and supply chain disruptions. The bank expects inflation to return to its 2% target in the second half of 2022.
The decision to maintain the interest rate at its current level is aimed at supporting the Canadian economy and promoting a sustainable recovery. The bank believes that keeping interest rates low will encourage borrowing and spending, which will in turn stimulate economic growth.
The bank also reiterated its commitment to continue its quantitative easing program, which involves purchasing government bonds to keep interest rates low and support the economy. It will continue to buy at least $3 billion worth of bonds per week until the recovery is well underway.
While the bank acknowledged that the Canadian housing market is showing signs of overheating, it stated that it will not raise interest rates to cool down the market. Instead, it will monitor the situation closely and take necessary actions if needed.
In conclusion, the Bank of Canada’s decision to maintain the interest rate at 0.25% until at least June 2024 reflects its cautious approach towards the economic recovery. It will continue to closely monitor the situation and make adjustments as necessary to support the Canadian economy.
