Bank of Canada keeps interest rate unchanged
Source: Xinhua | 2020-10-29
The Bank of Canada kept its key interest rate at 0.25 percent on Wednesday.
Although the Canadian economy is showing signs of recovering from the impact of COVID-19, the Canadian central bank has adjusted down its growth outlook for 2021, saying that the Canadian economy expects economic activity to return to pre-pandemic levels at the start of 2022.
The bank noted that the COVID-19 impacts could be more severe than anticipated, saying it did not expect the output gap to close until 2023.
It forecast annual inflation at 0.6 percent in 2020, 1 percent in 2021 and 1.7 percent in 2022.
It also forecast the Canadian economy will contract 5.7 percent in 2020, then growing 4.2 percent in 2021 and 3.7 percent in 2022.
At a press conference Wednesday morning, Governor of the Bank of Canada Tiff Macklem said it will take quite some time for the economy to fully recover from the COVID-19 pandemic, and the path will be uneven across sectors and choppy over time.
"We know the pandemic is reducing investment and is likely to cause long-lasting damage to some people's job prospects. These forces will reduce Canada's economic potential," Macklem said.
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