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Bank of Canada holds rates, sees economic growth outpacing expectations

Finance Materials 10 March 2021 21:37 (UTC +04:00)
Bank of Canada holds rates, sees economic growth outpacing expectations

The Bank of Canada on Wednesday revised to positive its outlook for GDP growth in the first quarter, saying Canada’s economy was proving more resilient to a second wave of COVID-19 than expected, and held its key overnight rate steady, Trend reports citing Reuters.

The central bank also reiterated that interest rates would remain at a record low 0.25% until economic slack is absorbed, which in its January forecast does not happen until into 2023, and kept the current pace of its bond-buying program.

“In Canada, the economy is proving to be more resilient than anticipated to the second wave of the virus and the associated containment measures,” the BoC said in its statement.

The central bank said that while economic prospects have improved, the recovery still requires extraordinary monetary policy support.

It also noted employment remains well below pre-pandemic levels and highlighted the risk that new outbreaks of more transmittable variants of COVID-19 could add to the choppiness of the recovery.

The unexpected strength of Canada’s economy through the end of 2020 and into 2021 has boosted bets that the central bank will hike rates sooner than their current guidance.

Last month, Bank of Canada Governor Tiff Macklem said Canada’s economy would see a solid and sustained rebound this year as inoculations ramp up, but warned a full recovery was still a ways off.

The Canadian dollar was trading 0.1% lower at 1.2650 to the greenback, or 79.05 U.S. cents after the rate decision.

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