BoC Governor Tiff Macklem told a parliamentary committee that “the very rapid growth of the reopening phase is now over”. The economy has “has entered in the slower-growth recuperation phase”. GDP would have shrunk around -5.5% in 2020 and it’s expected to grow around 4% in 2021 and 2022.
Growth is anticipated to be “uneven across sectors and choppy over time”. Business investment will “remain subdued” and exports to “grow only slowly”. The economy will still be operating its potential into 2023. Inflation is expected to stay below the 1-3% target range “until early next year”, and remain less than 2% “into 2023”.
Interest rate will remain at 0.25%, the effective lower bound “for an extended period”. BoC has committed to keep it there “until economic slack is absorbed so that the 2 percent inflation target is sustainably achieved”. In the current outlook “this takes us into 2023”. The QE program all also “continue until the recovery is well underway”.
