The Bank of Canada left its benchmark overnight interest rate unchanged at 0.25% and said it would maintain the current pace of its large-scale asset purchase program, also known as quantitative easing.
A statement explaining the decision reiterated the central bank’s past guidance that it would leave its key interest rate near zero until economic slack is absorbed and the 2% inflation target is achieved on a sustainable basis. Based on the bank’s most-recent projections, that could happen sometime during the second half of 2022.
“With vaccinations proceeding at a faster pace, and provincial containment restrictions on an easing path over the summer, the Canadian economy is expected to rebound strongly, led by consumer spending,” the central bank said in its statement.
The statement said further adjustments to the quantitative easing program would be guided by its ongoing assessment of the Canadian economy’s recovery from the effects of the Covid-19 pandemic. The Bank of Canada in April reduced its weekly bond purchases to 3 billion Canadian dollars, or the equivalent of $2.48 billion, from a previous level of C$4 billion.