BoC left overnight rate at “effective lower bound” of 0.25% widely expected. Bank rate and deposit rate are held at 0.50% and 0.25% respectively. It will continue with the QE program with CAD 4B per week. BoC expects no rate hike until into 2023, while QE will continue until recovery is “well underway”.
Globally BoC said “the arrival of effective vaccines combined with further fiscal and monetary policy support have boosted the medium-term outlook for growth”. Global GDP growth is projected to average just over 5% in 2021 and 2022, then slow to 4% in 2023.
For Canadian, Growth in Q1 of 2021 is now “expected to be negative” due to resurgence of coronavirus infections and lockdowns. Though, BoC expects a “strong second-quarter rebound” assuming that restrictions are lifted later in Q1. It projects Canadian economy to growth 4% in 2021, almost 5% in 2022, and around 2.5% in 2023. Canada CPI is expected to rise temporarily to around 2% in H1 and return sustainably to 2% target in 2023.
