Status Quo: 0.25%
CBJ – It’s beginning to sound like a broken record, but the Bank of Canada has again kept its key overnight interest rate at 0.25%.
The central bank says a variety of reasons went into the status quo decision, including an increasing possibility that a serious fourth wave of the COVID-19 pandemic could sweep across the country as businesses look towards economic recovery. One major problem for many industries is a lack of supply to fill demand, which has caused inflation to rise at a much higher rate than desired.
“The governing council judges that the Canadian economy still has considerable excess capacity, and that the recovery continues to require extraordinary monetary policy support,” the bank said in a statement released on Wednesday.
Of concern is that Canada’s GDP contracted in the second quarter, providing a clear indicator that the economic rebound has hit a few speed bumps on the road to recovery, with more bumps still to pass.
Despite the obstacles faced throughout the year thus far, the Bank remains optimistic that the national economy will strengthen until the end of the calendar year.
The next interest rate decision is scheduled for October 27. It will also be the time when the Bank will release its updated forecast for the economy and inflation as part of its comprehensive monetary policy report.