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Bank of Canada maintains key interest rate at 0.25 per cent

Last Updated Dec 9, 2020 at 8:40 am PST

The Bank of Canada building is shown in Ottawa on April 24, 2019. THE CANADIAN PRESS/Sean Kilpatrick
Summary

Bank of Canada says it'll hold key interest rate at 0.25 per cent until inflation objective reached

Bank of Canada says it doesn't expect inflation to get back on target until some time in 2023

OTTAWA (NEWS 1130) – The Bank of Canada is keeping its key interest rate at 0.25 per cent — where it’s been for months.

The central bank says it will hold the policy interest rate at the effective lower bound until economic slack is absorbed so that the two per cent inflation target is sustainably achieved.

“In our October projection, this does not happen until into 2023,” the bank says, adding the rebound in local and global economies has gone as it had anticipated in its report released in October.

The Bank of Canada notes that COVID-19 vaccine development is “providing reassurances” that normal activity is on the horizon. However, is says there is still much uncertainty around global vaccine rollout.

The bank also says that it will maintain its quantitative easing program by continuing to buy about $4 billion in bonds per week to try and further reduce interest rates.

The announcement marks the last rate decision the central bank will make this year, after an extraordinary 2020 that saw it slash rates in response to the economic crisis caused by COVID-19.

Wednesday also marks a change in the upper echelons of the bank’s leadership, as senior deputy governor Carolyn Wilkins departs after a nearly 20-year career at the Bank of Canada.

We’ll have more in Business at :26 and :56.