Bank of Canada Leaves Monetary Policy Unchanged
The Bank of Canada decided to keep its target for the overnight rate at 0.25%, in line with forecasts and to maintain its forward guidance, which sees a rise in the overnight rate sometime in the middle quarters of 2022. Until then, policymakers vowed to provide an adequate degree of monetary stimulus to support Canada’s economy and achieve the inflation target of 2%. On the price front, the ongoing supply disruptions continue to support high inflation rates but gasoline prices, which have been a major upside risk factor, have recently declined. Still, the BoC continues to expect inflation to remain elevated in the first half of 2022 and ease towards 2% in the second half of the year. Finally, recent economic indicators suggested the economy had considerable momentum in Q4, namely in the labor and housing markets, but the omicron variant of the coronavirus and the devastation left by the floods in British Columbia added to downside risks.
7 hours ago