The Bank of Canada leaves its key interest rate unchanged at 0.25%

La Banque du Canada laisse son taux directeur inchangé à 0,25%

Photo: Adrian Wyld, The canadian Press
The role played in the recovery, return-to-Tiff Macklem, who recently embarked on its mandate.

The economy seems to have avoided the worst-case scenario in terms of pandemic COVID-19, said on Wednesday the Bank of Canada keeping its key rate at 0.25 %, a level which it considers to be its floor value.

The central bank has also modified some of the programs designed to facilitate the flow of credit, pointing to an improvement in the indicators of the market and the economy as a whole.

Overall, the central bank said Wednesday that it considered that the impact of the pandemic on the global economy had reached a peak, but has hedged its outlook by warning that the uncertainty regarding the progress of the recovery remained high.

Since the pandemic has hit Canada and that the restrictions of public health have essentially paralyzed the economy in march, the country has registered a historical decrease employment and production. The most recent federal data now show that nearly 8.4 million people have asked the provision of canadian emergency for workers affected by the crisis. These figures are used as an approximation of the overall labour market, because the benefit is paid to anyone unemployed or earning less than 1000 $ per month because of the COVID-19.

The Statistics Canada survey on the labour market for the month of may will be unveiled on Friday, and forecasted further losses of jobs, more than three million of accumulated losses in march and April.

The central bank also upgraded Wednesday its forecast for the gross domestic product (GDP) and is now wagering on a decline between 10 % and 20 % for the second quarter compared to the fourth quarter of 2019, when she spoke in April, a decline of between 15% and 30 %.

The bank expects that the economy returned to growth in the third quarter thanks to public spending and lower interest rates, which would ” cushion the impact of the closures on the disposable income and help to lay the foundations for a recovery “. Despite this, she notes that the outlook for the second half of 2020, and more later, remain “highly” blurred “.

“Anyone who believes that we will have a recovery in a V-shape is wrong, I think,” said Tuesday the president of the Chamber of commerce, Perrin Beatty, to a senate committee.

He believed that to revive the economy, there should be a policy “consistent across provincial and territorial borders,” which takes into account the concerns of public health to manage the pandemic, so that businesses, workers and consumers feel that ” it is again safe to do business.”

New governor

The role played by the central bank in the recovery will come back to Tiff Macklem, who began Wednesday its new mandate as governor, succeeding Stephen Poloz, including the passage of seven years at the head of the institution was completed on Tuesday.

Mr. Macklem has participated as an observer in the deliberations of the management board of the bank in recent days, according to the press release, adding that the new governor ” is in agreement with the decision on the rate and the measures announced “.

The chief economist of the CIBC, Royce Mendes, has indicated that he should perhaps not wait too long before Mr. Macklem puts its imprint on the banking policy, as it is still ” a lot of work to do to bring the economy back to life “.

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