Bank of Canada holds firm on rock-bottom interest rate
Posted January 26, 2022 7:06 am.
Last Updated January 26, 2022 6:40 pm.
The central bank announced the trendsetting rate will remain at 0.25 per cent, despite expectations an increase was coming this morning.
Economists say the move now gives the bank time to see the economic fallout from Omicron, and signals a potential increase in March.
The rise in the bank’s key policy rate affects costs for loans like variable-rate mortgages and other borrowing linked to the benchmark rate.
#Breaking The Bank of Canada maintains its overnight lending rate at 0.25%.
Says economic slack "now essentially absorbed" signaling a rate hike in March.— Mike Eppel (@eppman) January 26, 2022
In a statement, the Bank of Canada said it will be continuing its reinvestment phase as GDP growth appears to be even stronger than expected for the end of 2021.
“The global recovery from the COVID-19 pandemic is strong but uneven. The US economy is growing robustly while growth in some other regions appears more moderate, especially in China due to current weakness in its property sector,” the bank’s economists said Wednesday.
Adding, “oil prices have rebounded to well above pre-pandemic levels following a decline at the onset of the Omicron variant of COVID-19. Financial conditions remain broadly accommodative but have tightened with growing expectations that monetary policy will normalize sooner than was anticipated, and with rising geopolitical tensions.”
“Overall, the Bank projects global GDP growth to moderate from 6¾ % in 2021 to about 3½ % in 2022 and 2023.”
The next update on the overnight rate target will be March 2, 2022.
With files from The Canadian Press
