Bank of Canada maintains rate at 0.25%

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Even as the campaign of shock and fear that Wilkins helped orchestrate has subsided, policymakers continue to deploy historic levels of stimulation. The Bank of Canada reiterated that it would continue to buy Government of Canada bonds at a rate of about $ 4 billion per week to keep downward pressure on interest rates, and it reaffirmed that ‘it would keep the benchmark lending rate close to zero until 2023..

At the end of the day, Bank of Canada executives are most concerned about hitting their 2% inflation target. They noted that the inflation metrics they were tracking to get a sense of where prices are heading are all below 2% and that the “significant” economic slowdown is expected to “continue to weigh on inflation for more than 2%. some time”.

The Canadian dollar climbed to around 78 cents US from around 76 cents at the end of October when the central bank last revised its policies. Currency was a subject of reflection at these meetings, which was mentioned in the October 28 statement, and was said to have been one of the factors that influenced the central bank’s decision to add monetary stimulus by making a “extraordinary” promise to leave the benchmark. rate close to zero for more than two years.

The exchange rate also weighs on the central bank’s inflation calculations, as it has implications for the cost of imported goods and services. In the current environment, a stronger currency could act as another downward price force, adding to the challenge of bringing overall price increases to 2%.

“The way I read the Bank of Canada’s comment is that it can’t do anything about the strength of the dollar because it is a widespread depreciation of the US dollar,” said Charles St. Arnaud, Chief Economist at Alberta Central. “With the fall in the prices of imported products, we could see this contribution decrease in the months to come, pushing inflation down, even canceling some of the domestic pressures.”

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