BoC Governor Tiff Macklem told the House of Commons Standing Committee on Finance that “the economy is making good progress”. But “a complete recovery will still take some time” with the third wave of coronavirus a new set back. BoC remains “steadfast in our commitment to support Canadian households and businesses through the full length of the recovery”.
With vaccinations progressing, he added, “we are expecting strong consumption-led growth in the second half of this year”. Inflation would increase over the next couple of months largely reflecting “base-year effects” and rise is gasoline prices. But inflation would only return to target as slack is absorbed in H2 of 2022.
The reduction of weekly QE purchase from CAD 4B to CAD 3B reflects the progress made toward economic recovery. Macklem noted, “further adjustments to the pace of net purchases will be guided by our ongoing assessment of the strength and durability of the economic recovery”. Also, “further adjustments to our QE program will be gradual, and we will be deliberate in both our assessment of incoming data and the communication of our analysis.”
