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Bank of Canada leaves key interest rate unchanged

Last Updated Jun 3, 2020 at 7:39 am PDT

The Bank of Canada building is seen in Ottawa, Wednesday, April 15, 2020. The Bank of Canada is expected to keep its key interest rate unchanged this morning on the first day of governor Tiff Macklem's tenure. THE CANADIAN PRESS/Adrian Wyld
Summary

Bank of Canada is keeping its benchmark interest rate steady at 0.25 per cent

Central bank says impact of COVID-19 appears to have peaked, but uncertainty about how recovery will unfold remains high

BoC believes Canada has avoided the worst-case economic scenario that it painted in April

OTTAWA – The Bank of Canada is keeping its benchmark interest rate at one-quarter per cent.

It has trimmed estimates for the economic downturn, saying the impact of COVID-19 appears to have peaked, however, uncertainty about how the recovery will unfold remains high.

The bank it believes Canada has avoided the worst-case economic scenario that it painted in April, updating its GDP figures for the second quarter of the year.

The Bank of Canada now expects GDP to decline between 10 and 20 per cent compared with the fourth quarter of 2019, down from the 15 to 30 per cent decline forecasted in April.

In a statement announcing the rate decision, the central bank says it still expects the economy to resume growth in the third quarter.

This comes as Tiff Macklem marks his first day on the job as governor of the Bank of Canada, taking over from Stephen Poloz.