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Bank of Canada keeps benchmark rate at record low

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The Bank of Canada opted to keep its benchmark interest rate steady at a record-low 0.25 per cent Wednesday, saying the pandemic recovery “continues to require extraordinary monetary policy support.”

The Bank of Canada slashed its benchmark interest rate to help stimulate the economy during the COVID-19 pandemic.(David Kawai/Bloomberg)

The Bank of Canada opted to keep its benchmark interest rate steady at a record-low 0.25 per cent Wednesday, saying the pandemic recovery “continues to require extraordinary monetary policy support.”

The bank said in a statement that it intends to hold the policy interest rate until the economy is recovered, possibly in the second half of 2022, moved up from an earlier prediction of 2023.

The central bank meets every six weeks to set its interest rate based on whether or not the economy needs a helping hand or to be slowed down in the face of too-high inflation. The bank’s rate filters into the real economy by impacting the rates that consumers get on things like variable rate mortgages and savings accounts.

The bank cuts its rate when it wants to encourage borrowing and investing to stimulate the economy, and it raises its rate to cool things down.

The bank slashed its rate shortly after the pandemic started in March 2020, cutting it by 1.5 percentage points over a few weeks to give the economy stimulus to weather COVID-19.

 

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Credit belongs to : www.cbc.ca

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