Advertisement

Bank of Canada keeps key rate at 0.25%, sees ‘slow and choppy’ recovery ahead

Click to play video 'Coronavirus: Bank of Canada Governor says COVID-19 created ‘unprecedented fall in economic activity’' Coronavirus: Bank of Canada Governor says COVID-19 created ‘unprecedented fall in economic activity’
The Governor of the Bank of Canada Tiff Macklem provided an update on Canada's economic outlook on Wednesday, sharing his belief that the COVID-19 pandemic has created an "unprecedented fall in economic activity in Canada." Macklem says Canada is facing "many uncertainties" due to the pandemic and that they cannot forecast with the usual degree of accuracy, but instead provided a "central economic scenario" for the country going forward.

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.

READ MORE: Bank of Canada cuts benchmark mortgage rate for 3rd time in months

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.”

Story continues below advertisement

READ MORE: Mortgage deferrals will soon end for many Canadians. Then what?

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