Mortgage Blog

Bank of Canada Rate Announcement - July 15, 2020

January 20, 2021 | Posted by: Ken Fadel

As expected, the Bank of Canada announced today that it is holding its target for the Overnight Rate at 0.25%. This is new Governor Tiff Macklem’s first policy decision since taking over on June 3.

The BoC stated that 'global economic activity is picking up. This return to growth reflects the relaxation of necessary containment measures put in place to slow the spread of COVID, combined with extraordinary fiscal and monetary policy support. As a result, financial conditions have improved.'

The Canadian economy is starting to recover from the deepest drop on economic activity since the Great Depression.  The BoC now forecasts a GDP decline of 7.8% for 2020, and growth of 5.1% in 2021 and 3.7% in 2022.

Having said that, the BoC expects slack in the economy to persist as demand lags supply.  As such, the BoC believes that the Canadian Economy will continue to require extraordinary monetary policy support. The Governing Council will hold the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2% inflation target is sustainably achieved.'

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