The Bank of Canada (BoC) announced on Wednesday that it left its key rate unchanged at 0.25% following the July policy meeting as expected. Moreover, the bank said that it will continue to purchase government of Canada bonds at a target weekly rate of C$2 billion.
Market reaction
With the initial market reaction, the USD/CAD pair edged slightly lower but didn't have a difficult time erasing its losses. As of writing, the pair was up 0.18% on the day at 1.2666.
Key takeaways from policy statement as summarized by Reuters
"Committed to holding the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2% inflation target is sustainably achieved."
"Economic slack to be absorbed in the second half of 2022."
"Supply chain disruptions are restraining activity in some sectors and rising cases of COVID-19 in many regions pose a risk to the strength of the global recovery."
"Financial conditions remain highly accommodative."
"Expecting the economy to strengthen in the second half of 2021, although the fourth wave of COVID-19 infections and ongoing supply bottlenecks could weigh on the recovery."
"Factors pushing up inflation are expected to be transitory but their persistence and magnitude are uncertain and will be monitored closely."
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