As expected, the Bank of Canada left the key interest rate unchanged at 0.25% and the QE program. Analysts at RBC Capital Markets point out that the forward guidance presented today suggests that there is an extended period of low rates ahead.
“The bank said the economic outlook at home and abroad is generally evolving as expected with activity picking up as economies re-open. Early recoveries in Canada and the US have been firmer than expected.”
“Governing Council tweaked its previous commitment to “provide further monetary stimulus as needed,” instead saying its QE program (set to continue until the recovery is well underway) will be calibrated to provide the necessary stimulus. While that suggests the program could be expanded or tapered if required, we don’t think it flags an imminent change in the bank’s asset purchases.”
“Non-MPR meetings are followed by an economic progress report from a member of the BoC’s Governing Council. Governor Macklem is scheduled to speak tomorrow on “the uneven effects of COVID-19 on different sectors and people in the economy.”