Bank of Canada leaves policy rate unchanged at 0.25% in March as expected
|In a widely expected decision, the Bank of Canada (BoC) announced on Wednesday that it left its key rate unchanged at 0.25% following the March policy meeting.
Key takeaways from policy statement as summarized by Reuters
"Will hold the current level of policy rate until inflation objective is sustainably achieved, will continue quantitative easing."
"Will maintain extraordinary forward guidance, reinforced and supplemented by the QE program, which continues at its current pace of at least C$4 billion per week."
"C$ has been relatively stable against the USD but has appreciated against most other currencies."
"Economy is proving to be more resilient than anticipated to the second wave of the virus and the associated containment measures."
"Canada GDP growth in Q1 of 2021 is now expected to be positive, rather than the contraction forecast in January."
"Housing market activity has been much stronger than expected."
"Spread of more transmissible variants of COVID-19 poses the largest downside risk to activity."
"Overall, Canadian inflation is likely to move temporarily to around the top of the band in the next few months."
"Inflation then expected to moderate as base-year effects dissipate and excess capacity continues to exert downward pressure."
"January projection does not expect economic slack to be absorbed until some point in 2023."
"Pace of net purchases of the government of Canada bonds will be adjusted as required."
Market reaction
The USD/CAD pair edged modestly higher with the initial market reaction and was last seen gaining 0.05% on the day at 1.2642.
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