A pedestrian walks past The Bank of Canada in Ottawa on Tuesday, Dec. 15, 2020. THE CANADIAN PRESS/Sean Kilpatrick

A pedestrian walks past The Bank of Canada in Ottawa on Tuesday, Dec. 15, 2020. THE CANADIAN PRESS/Sean Kilpatrick

Bank of Canada keeps key interest rate target on hold

Today’s announcement points to a recovery some time in the second half of 2022

The Bank of Canada is keeping its key interest rate target on hold at 0.25 per cent.

The rate has been on hold at its rock-bottom level since the onset of the pandemic last year and the central bank has said it won’t increase the rate until the economy has recovered.

Today’s announcement points to a recovery some time in the second half of 2022.

First quarter growth figures for the Canadian economy came in below the central bank’s forecast, but today’s announcement brushes off the shortfall.

The statement says stronger-than-expected household spending and more imports over the first three months of the year point to rising consumer confidence and resilient demand.

The statement adds that renewed lockdowns during the third wave of the pandemic dampened economic activity in the second quarter, as anticipated, affecting workers in high-contact industries like restaurants.

The bank says it expects the Canadian economy to rebound strongly starting this summer, led by consumer spending, as vaccinations proceed at a faster pace and provincial governments ease economic restrictions.

Housing market activity also gets a nod in the rate announcement, with the bank’s governing council forecasting activity to moderate, but remain elevated over the coming months.

The bank also says it expects annual inflation figures to hover around three per cent over the summer because of higher gas prices and comparing prices now to the low levels they were at last year because of the pandemic.

Inflation should then ease later this year, the bank says, but warns that the path of the pandemic and the evolution of new variants still pose a risk to the inflation outlook.

The bank also says it will stay the course on its federal bond purchases for now, after tapering purchases just a few weeks ago citing improving economic conditions.

The purchases help drive down rates charged on mortgages and business loans.

CIBC senior economist Royce Mendes writes the bank chose not to make any waves of its own in financial markets with the third wave of the virus still winding down across the country.

The Canadian Press

Like us on Facebook and follow us on Twitter.

Want to support local journalism? Make a donation here.

Banking

Just Posted

Eric White’s roadside farm stand in Metchosin sits stocked with produce. (Photo courtesy of Eric White)
Fledgling Metchosin farmer frustrated by thefts from stand

Eric White said every dollar made at the roadside helps sustain his farm

Greater father involvement in the home leads to improved childhood development and increased marital satisfaction, says expert. (Black Press Media file photo)
University of Victoria researcher finds lack of father involvement a drag on gender equality

Working women still taking on most child and household duties in Canada

Emergency health services treated a person after they were blocking traffic at the intersection of Fort and Douglas Streets on June 17. (Evert Lindquist/ News Staff)
Victoria intersection traffic returns to normal after protester blocked roadway

A person in a motorized wheelchair was blocking the intersection at Fort and Douglas Streets

New COVID-19 cases on Vancouver Island by local health area for the week of June 6-12. (B.C. Centre for Disease Control image)
New COVID-19 cases up on Island, but health officials say trends going right way

There were 22 new COVID-19 cases in Greater Victoria last week after just four the week before

Helicopter crew members onboard HMCS Halifax conduct inflight refueling during Operation Reassurance in the Mediterranean Sea in 2020. Some of the military choppers flying around Greater Victoria recently are taking part in a special ops training exercise. (Photo by Cpl. Braden Trudeau/Trinity-Formation Imaging Services)
Special Ops exercise brings influx of helicopters to Victoria

Ontario-based air force unit comes to Victoria to train over ocean

People line up to get their COVID-19 vaccine at a vaccination centre, Thursday, June 10, 2021 in Montreal. THE CANADIAN PRESS/Ryan Remiorz
Vaccines, low COVID case counts increase Father’s Day hope, but risk is still there

Expert says people will have to do their own risk calculus before popping in on Papa

(Black Press Media file photo)
POLL: When was the last time you visited the mainland?

The films are again lighting the screens at local theatres, the wine… Continue reading

Anyone with information on any of these individuals is asked to call 1-800-222-TIPS (8477) or visit the website victoriacrimestoppers.ca for more information.
Greater Victoria Crime Stoppers wanted list for the week of June 15

Greater Victoria Crime Stoppers is seeking the public’s help in locating the… Continue reading

The Co-op gas station at Whiskey Creek is burning after a camper van exploded while refueling just before 4 p.m. on Thursday, June 17, 2021. (FACEBOOK PHOTO)
Exploding camper van torches Highway 4 gas station between Qualicum Beach and Port Alberni

Highway traffic blocked after Whiskey Creek gas station erupts into flames

Helen Austin performing with Trent Freeman at the 2018 Vancouver Island MusicFest. Austin is one of the many performers listed for the 2021 event.
Vancouver Island MusicFest goes virtual for 2021

Black Press to stream 25 hours of programming July 9-11

FILE – A science class at L.A. Matheson Secondary in Surrey, B.C. on March 12, 2021. (Lauren Collins/Surrey Now Leader)
Teachers’ union wants more COVID transmission data as B.C. prepares for back-to-school

BCTF says that details will be important as province works on plan for September

Provincial health officer Dr. Bonnie Henry outlines B.C.’s COVID-19 restart plan, May 25, 2021, including larger gatherings and a possible easing of mandatory masks on July 1. (B.C. government photo)
B.C. records 120 new COVID-19 cases, second vaccines accelerating

Lower Pfizer deliveries for early July, Moderna shipments up

A Heffley Creek peacock caught not one - but two - lifts on a logging truck this month. (Photo submitted)
Heffley Creek-area peacock hops logging trucks in search of love

Peacock hitched two lifts in the past month

The Calgary skyline is seen on Friday, Sept. 15, 2017. THE CANADIAN PRESS/Jeff McIntosh
2 deaths from COVID-19 Delta variant in Alberta, 1 patient was fully immunized

Kerry Williamson with Alberta Health Services says the patients likely acquired the virus in the hospital

Most Read