Later this week, the Banque du Canada or BoC (Bank of Canada), Canada’s Central Bank, said in a statement that it would likely to start raising interest rate by late-2022 citing a sharp recovery in Canadian economy alongside a less detrimental than fretted fiscal fallouts of the pandemic in the country.
Apart from that, the BoC had tapered its bond repurchase program amid prospects of a rapid economic recovery, as the Canadian Central Bank was expecting the pandemic’s fiscal consequences would be recovered as early as by late-2022, much earlier than a prior forecast of 2023.
On top of that, BoC had held its benchmark overnight borrowing cost steady at 0.25 per cent.
Bank of Canada raises full-year growth forecast, holds rates steady
In tandem, adding that the BoC would not raise its benchmark borrowing costs until a full-fledged economic recovery, BoC Governor Tiff Macklem said in an interview with the reporters following the announcement, “What we do when those conditions are met, we’ll have to assess that at the time.
There’s nothing mechanical. We’re looking for a full recovery, we’re not going to count our chickens before they’re hatched”. Alongside this, BoC had been quoted saying in the statement that it was targeting the country’s inflation to hold between 1%-3%.
Aside from that, the Canadian Central Bank had said on its Spring Monetary Policy Report late on Wednesday that the gross output of Canada would likely to grow about 6.5 per cent this year, above from a January forecast of 4.0 per cent, while BoC has also been expecting the US economy to grow by 7.0 per cent in 2021, up from a prior forecast of 5.0 per cent made earlier this year.