BoC leaves its benchmark interest rates at 0.25% and QE program at $5 billion per week

The Bank of Canada (BoC) maintained its benchmark interest rates unchanged at 0.25 percent on Wednesday, as widely expected. It also left its quantitative easing (QE) program at $5 billion per week.

In its policy statement, the Canadian central bank noted:

• Both the global and Canadian economies are evolving broadly in line with the scenario in July Monetary Policy Report (MPR);
• Bank continues to expect this strong reopening phase to be followed by protracted and uneven recuperation phase, which will be heavily reliant on policy support; the pace of the recovery remains highly dependent on path of COVID-19 pandemic and evolution of social distancing measures;
• Canada's real GDP fell by 11.5 percent (39 percent annualized) in Q2, resulting in decline of just over 13 percent in H1, largely in line with Bank’s July MPR central scenario;
• Bounce-back in activity in Q3 looks to be faster than anticipated in July;
• The Bank continues to expect recuperation phase to be slow and choppy as the economy copes with ongoing uncertainty and structural challenges;
• CPI inflation is close to zero, with downward pressure from energy prices and travel services, and is expected to remain well below target in the near term
• As the economy moves from reopening to recuperation, it will continue to require extraordinary monetary policy support;
• Governing Council will hold the policy interest rate at effective lower bound until economic slack is absorbed so that 2-percent inflation target is sustainably achieved;
• QE program will continue until the recovery is well underway and will be calibrated to provide the monetary policy stimulus needed to support the recovery and achieve the inflation objective.