BoC kept overnight rate unchanged at effective lower bound of 0.25%. Bank rate and deposit rate were held at 0.50% and 0.25% respectively. it also maintain the target pace of QE at CAD 3B per week. It also maintained that rate hike would happen “some time in the second half of 2022”.
The central bank said economic developments have been “broadly in line” with April MPR. While Q1 GDP growth was lower than projected, “the underlying details indicate rising confidence and resilient demand”. Q2 activity was dampened by renewed lockdowns while contact-sensitive jobs were most affected once again.
However, “with vaccinations proceeding at a faster pace, and provincial containment restrictions on an easing path over the summer, the Canadian economy is expected to rebound strongly, led by consumer spending”. Though, there continues to be uncertainty about the new COVID-19 variants. Risks to inflation outlook also “remain relevant”.
