Bank of Canada leaves policy rate unchanged at 0.25% as expected


In a widely expected decision, the Bank of Canada (BoC) on Wednesday announced that it left its key rate unchanged at 0.25% at its June policy meeting. In its rate statement, the BoC noted that its central scenario doesn't expect the Canadian economy to return to pre-COVID-19 levels until 2022.

Market reaction

The USD/CAD pair showed little to no reaction and was last seen losing 0.28% on the day at 1.3575.

Additional takeaways

"Central scenario assumes most large-scale containment measures will be gradually lifted and that the coronavirus pandemic will have largely run its course by mid-2022."

"BoC scenario sees Canada 2020 Q4 real GDP falling by 6.8%; projects 2020 real GDP down 7.8%, up 5.1% in 2021 and up 3.7% in 2022."

"Canadian economic activity in Q2 2020 is estimated to have fallen about 15% below its level at the end of 2019; economy appears to have hit bottom in April."

"BoC scenario sees US projected growth in 2020 down 8.1%; 2021 growth up 3.4% and 2022 growth up 4.3%."

"Global output falls by 5.2% in 2020 and then grows by 5.2% in 2021 and 5.4% in 2022; despite strong rebound, global output at the end of 2022 expected to remain about 4% lower than the projected level in January monetary policy report."

"BoC estimates level of global GDP in the second quarter was about 10% below its level in the fourth quarter of 2019."

"Economic recovery has begun in all provinces, territories and across many sectors; economic activity is picking up notably as coronavirus containment measures are relaxed."

"BoC scenario anticipates that, with weaker investment in the face of reduced demand and low prices, oil production is now on a considerably lower path than before the COVID-19 crisis."

"Overall economic risks appear to be tilted to the downside, largely because of the potential for a second wave of the virus."

"Canada's economic output will likely take some time to return to its pre-COVID-19 level; many workers and businesses can expect to face an extended period of difficulty."

"There is not enough information to estimate how deeply the economy may be scarred from business closures or massive job losses."

"BoC scenario assumes oil prices at $40 for Brent and Wti, $30 for WCS per barrel."

"Global financial conditions have improved substantially since the April report; equity prices have recovered a significant portion of their losses, credit spreads have narrowed & volatility has declined across all markets."

"Consumer price index (CPI) inflation is expected to remain weak before gradually strengthening towards 2% target as drag from low gasoline price and other temporary effects dissipate and demand recovers, reducing economic slack."

"BoC estimates total supply was about 9% lower in q2 2020 than in q4 2019, sharp contraction in supply amounts to about 60% of the decline in gdp over the same period."

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD bid above 1.18 as US 10-year yield drops

EUR/USD has cleared hurdle at 1.18 alongside a decline in US yields. The US 10-year yield has retreated from five-week highs. A fiscal impasse in Washington is likely weighing over yields and the dollar. 

EUR/USD News

GBP/USD shrugs off recession fears to keep bounce off 1.3000

GBP/USD eases from highs of 1.3073 while heading into the London open on Thursday. Even so, the pair keeps its pullback from the previous day’s low of 1.3005. UK GDP confirms recession. US Jobless Claims, risk catalysts in focus.

GBP/USD News

Gold: $1907 is the last straw for the XAU/USD bulls

Gold consolidates the $90 bounce below $1950, having witnessed good two-way volatility on Wednesday. Falling US Treasury yields continue to pressure the US dollar across the board, supporting the yieldless gold.

Gold News

US Jobless Claims Preview: Lower claims sign of an economic acceleration?

When initial jobless claims jumped 10% in the middle of July speculation connected the increase with the Covid prompted economic rollbacks in several Southern and Western states. Initial jobless claims expected to edge down from pandemic low.

Read more

WTI: Bulls attack $43.00 inside short-term rising channel

WTI defies the previous day’s pullback from $43.12 with a bounce off $42.76. The energy benchmark flaunted the biggest gains in a month on Wednesday while keeping a one-week-old ascending trend channel formation.

Oil News

Forex MAJORS

Cryptocurrencies

Signatures