Bank of Canada continues keeping interest rate at 0.25 percent

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The Bank of Canada announced Wednesday to continue keeping its key interest rate target at 0.25 percent.

The central bank said in a statement that its interest rate will stay there until inflation is back on target.

The bank cut its key rate from 1.75 percent to the current record low of 0.25 percent since March when COVID-19 lockdowns in the country brought the economy into a standstill.

It also took numerous other actions in financial markets to shore up stability and provide urgently needed liquidity, including launching programs to buy federal and provincial government debt, which was the bank’s first venture into a monetary policy strategy known as quantitative easing.

In the statement, the bank said that bounce-back activity in the third quarter looks to be faster than it anticipated in July. But it warns of indicators such as an uneven rebound in employment and subdued business confidence that points to a slow and choppy recovery process.

The bank stressed that both the global and Canadian economies are evolving broadly in line with the scenario it set out in its July monetary policy report, but said Canada’s reopening phase has been stronger than expected.

It reiterated that the central bank stands ready to do whatever is necessary to restore the economy amid the COVID-19 crisis, which will include continuing its quantitative easing program, with large-scale asset purchases of at least 5 billion Canadian dollars (about 3.8 billion U.S. dollar) per week of Government of Canada bonds until the recovery is well underway.

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