Bank of Canada keeps key interest rate target on hold at 0.25%

The Bank of Canada is keeping its key interest target on hold at 0.25 per cent.

It is also maintaining its quantitative easing program by buying bonds at a target pace of $2 billion per week.

The central bank says it continues to expect the economy to strengthen in the second half of the year, although the fourth wave of COVID-19 infections and supply bottlenecks could weigh on the recovery.

In announcing its decision, the Bank of Canada repeated its commitment to hold its trendsetting rate at near-zero until the economy is ready to handle an increase in rates, which it doesn’t expect to happen before the second half of 2022.

The central bank noted that inflation remains above three per cent as expected, boosted by base-year effects, gasoline prices, and pandemic-related supply bottlenecks.

However, it says the factors pushing up inflation are expected to be transitory, but their persistence and magnitude are uncertain and will be monitored closely.

(The Canadian Press)

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