Breaking: BoC leaves policy rate unchanged, lowers weekly QE purchases to C$3 billion

FXStreet Team FXStreet

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 April policy meeting. Additionally, the BoC noted that it is adjusting the weekly net purchases of the government of Canada bonds to a target of C$3 billion from C$4 billion.

Market reaction

With the initial market reaction, the USD/CAD pair lost more than 50 pips in a matter of minutes and was last seen losing 0.48% on a daily basis at 1.2547.

Key takeaways from policy statement as summarized by Reuters

"Adjustment to the amount of incremental stimulus being added each week reflects the progress made in the economic recovery."

"BoC remains 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."

"Based on the bank’s latest projection, this is now expected to happen some time in the second half of 2022."

"Even as economic prospects improve, governing council judges that there is still considerable excess capacity and the recovery continues to require extraordinary monetary policy support."

"Will continue to monitor the potential risks associated with the rapid rise in house prices."

"Will gauge the evolution of slack, will look at a broad spectrum of indicators, including various measures of labor market conditions."

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