The Bank of Canada held its key interest rate steady at 0.25 per cent on Wednesday and said the economy will continue to require extraordinary monetary policy support to recover from the slump triggered by the novel coronavirus pandemic.
The central bank’s key rate has remained at its lower effective bound since March when COVID-19 lockdowns plunged the economy into crisis.
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The economy has staged a strong recovery so far, with activity in the July-to-September period likely to bounce back faster than anticipated in July, the central bank said in a statement. However, after an initial sharp rebound, the rest of the economic recovery is likely to be “slow and choppy,” it said.
The bank says its key rate will stay at near-zero until economic slack is absorbed and the two-per-cent inflation target is “sustainably achieved.”
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The statement reiterated that the central bank stands ready to do whatever is necessary to aid the economy as it recuperates from the COVID-19 crisis, which will include ongoing purchases of federal government bonds.
— With a file from Erica Alini at Global News
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