The Bank of Canada (BoC) expects the economic recovery to occur in two phases, BoC Deputy Governor Lawrence Schembri said on Thursday. “Reopening phase and recuperation phase.”
Additional takeaways
“The reopening phase will be relatively rapid and see strong pickup as some measures are lifted and households consume goods and services that were not available during the lockdown.”
“Cautious household spending behaviour will likely continue until a coronavirus vaccine becomes available as uncertainty remains, including concerns about future COVID-19 outbreaks.”
“Fiscal measures should continue to buffer income losses and support household spending as the economy begins to recover.”
“Recuperation phase is highly uncertain and will be more prolonged and uneven; it will take some time for household income and confidence to return close to the pre-pandemic path.”
“More persistent disruptions in the job market could slow recovery during the recuperation phase.”
“Canadians are taking on debt more slowly than before the pandemic; the bank does not expect sharp rise in household debt to disposable income ratio, in part, because of emergency government income replacement programs.”
“Increased trend towards online shopping has made the economy more resilient; could help support recovery once underway.”
“Bank is prepared to take necessary actions to support the financial system and underpin recovery to achieve its 2% inflation target within a reasonable time frame.”
Market reaction
The USD/CAD largely ignored these comments and was last seen trading at 1.3607, gaining 0.33% on the day.
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