Bank of Canada Maintains Main Rate Unchanged

The Bank of Canada (BoC) has decided to maintain its current interest rate unchanged at 0.25%.

The Canadian central bank has vowed to maintain the low rate until the economic recovery from the impact of the Coronavirus pandemic is well underway.

This comes against some market expectations the BoC may opt for further rate cuts.

The BoC has also decided to maintain the current pace of its asset purchase program at CAD 4 billion per week.

According to the monetary policy statement, the central bank expects the Canadian gross domestic product (GDP) to see negative growth during the first quarter (Q1) of 2021, prompted by the recent surge in the number of new Coronavirus cases, which were a setback to the economy.

A 2.5% contraction is expected in Q1 of 2021, according to the policy statement.

It is worth noting that the Canadian economy shrank by 5.5% in 2020, due to the Coronavirus pandemic.