The Canadian economy is projected do contract by 7.8 percent in this year, the Bank of Canada said in its Monetary Policy Report for July 2020
TORONTO (Pakistan Point News / Sputnik - 16th July, 2020) The Canadian economy is projected do contract by 7.8 percent in this year, the Bank of Canada said in its Monetary Policy Report for July 2020.
Canada's central bank projections showed that the economy will return to pre-pandemic levels only in 2022, with the economy growing at a rate of 5.1 percent in 2021 and 3.7 percent in 2022.
The report also suggests that the central bank will keep the interest rate at its effective lower bound of 0.25 percent beyond 2022. The bank's Governing Council has said that the policy rate will not change until the 2 percent inflation target is met, which, according to the data, is will not be achieved within the next two years.
Earlier on Wednesday, Bank of Canada announced that it has decided to maintain the target overnight rate at its effective lower bound and that it will be continuing its program of quantitative easing, including weekly purchases of at least $3.70-billion worth of Government of Canada bonds.
In March, Bank of Canada announced three consecutive rate cuts in the span of a month that saw the overnight rate drop from 1.75 percent to its effective lower bound as Canada is trying to mitigate the effects of the fiscal crisis caused by the measures imposed to fight novel coronavirus pandemic.