Bank of Canada Rate Announcement - December 9, 2020
January 20, 2021 | Posted by: Ken Fadel
The BoC once again held its target overnight rate at 0.25% and reiterated an earlier pledge to keep it at that level until 2023. As the economy is battered by a second wave of COVID-19 the bank stated it would also to continue to purchase at least $4 billion of federal government bonds weekly to backstop its efforts
At this point the BoC seems content with the amount of stimulus in the economy, as there was no indication that the bank planned to reduce or add to the measures currently in place. This stand-pat tone was widely expected by economists as the pandemic plays out on economic growth.
The offsetting developments of shut downs in COVID hotspots and positive news on the vaccine front will “contribute to a choppy trajectory until a vaccine is widely available.”
The Liberal government’s decision to keep the spending taps open through the recovery were also noted. The BoC stated “Recently announced measures should help maintain business and household incomes during this second wave of the pandemic and support the recovery,”
The BoC is scheduled to release a new set of economic forecasts at its next monetary policy report in January.