As expected the Bank of Canada is opting to keep its key interest rate at 0.25%.
It’s the first rate announcement from new Governor Tiff Macklem, who took over from Stephen Poloz whose seven-year term ended last month.
Macklem cut right to the chase.
”It’s going to be a long climb out,” Macklem stated matter of factly.
”We are being unusually clear that interest rates are going to be unusually low for a long time.”
In addition, the central bank also released its quarterly economic outlook.
For 2020, it’s expecting the economy to shrink by 7.8% but then bounce back by 5.1% next year and 3.7% in 2022.
And that hinges on one large uncertainty – it assumes the economy will be spared a second COVID wave.
”We have assumed there is no widespread second wave and hence there’s no widespread second lockdown,” adds Macklem.
”But we do anticipate there will be localized flare ups and localized restrictions.”