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Bank of Canada keeps overnight interest rate at 0.25 per cent

Last Updated Jan 20, 2021 at 8:01 am PST

The Bank of Canada building is seen in Ottawa, Wednesday, April 15, 2020. Canada's central bank is turning to the public for input on its inflation-rate target that underlies any changes to the bank's trend-setting interest rate. THE CANADIAN PRESS/Adrian Wyld

OTTAWA (NEWS 1130) – The Bank of Canada isn’t budging. The central bank is keeping its key interest rate target on hold at 0.25 per cent.

The bank is citing the economic conditions and ongoing uncertainty from the pandemic as reasons for its decisions.

It also says that the earlier-than-anticipated arrival of vaccines has reduced economic uncertainty from “extreme levels.”

Still, the bank says it expects the economy to contract in the first quarter of 2021.

The bank forecasts real gross domestic product will decline by 2.8 per cent in the first quarter of the year compared to the same period in 2020, before improving thereafter if severe restrictions start easing in February.

The bank is forecasting growth of four per cent this year, then 4.8 per cent next year, and finally 2.5 percent in 2023.

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