Bank of Canada keeps interest rate the same
The rebound in employment and GDP in Canada was stronger than expected as the economy reopened through the summer
By ATB Economics 28 October 2020 1 min read
For the fourth time in a row, the Bank of Canada has announced* that it is keeping its key policy interest at 0.25 per cent. The decision to stand pat comes as no surprise given the ongoing challenges facing the Canadian economy.
According to the Bank, “the rebound in employment and GDP [in Canada] was stronger than expected as the economy reopened through the summer. The economy is now transitioning to a more moderate recuperation phase. In the fourth quarter, growth is expected to slow markedly, due in part to rising COVID-19 case numbers. The economic effects of the pandemic are highly uneven across sectors and are particularly affecting low-income workers.”
Inflation is forecast to stay below the Bank’s 2.0 per cent until 2023.
The economic recovery will depend on the path of the virus and “the near-term slowing in the recuperation phase is likely to be more pronounced as a result of the recent increase of COVID-19 infections.”
The Bank also notes that oil prices remain about 30 per cent below pre-pandemic levels. This will, in turn, weigh particularly heavily on the economic recovery here in Alberta.
*Each year, the Bank of Canada sets eight fixed dates on which it announces whether or not it will change its policy interest rate. The next announcement is scheduled for December 9.