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