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Bank of Canada keeps key interest rate at 0.25 percent
The Bank of Canada announced to keep its key interest rate unchanged at 0.25 percent on Wednesday as the COVID-19 pandemic continues to impact the economic recovery.
The governing council holds that the Canadian economy still has considerable excess capacity, and that the recovery continues to require extraordinary monetary policy support, the Canadian central bank said in an announcement.
The bank said it expects the economy to strengthen in the second half of 2021 though the COVID-19 fourth wave and supply issues may cause problems for the recovery.
It also said it would maintain its quantitative easing program by buying bonds at a target pace of 2 billion Canadian dollars (about 1.6 billion U.S. dollars) every week.
The central bank noted that inflation remains above 3 percent as expected, boosted by base-year effects, gasoline prices, and pandemic-related supply bottlenecks.
However, it said the factors pushing up inflation are expected to be transitory, but their persistence and magnitude are uncertain and will be monitored closely.
The annual pace of inflation rose to 3.7 percent in July, marking the biggest increase since May 2011.