Bank of Canada maintains interest rate: Read the official statement

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Bank of Canada keeps interest rate steady: See the official statement. Photo by Errol Mcihon/Postmedia

Article content The official statement of the Bank of Canada regarding its interest rate decision Wednesday, October 27, 2021 is here:

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Article content Today, the Bank of Canada maintained its overnight rate target at the effective lower bound of %. The Bank Rate is at % and the Deposit Rate at 1%. The Bank's exceptional forward guidance regarding the overnight rate path is being kept. The Bank will end quantitative easing (QE), and move into the reinvestment stage, where it will only purchase Government of Canada bonds to replace mature bonds. This video is not loading. We are sorry.

Tap here to view other videos by our team. Refresh your browser to see if the Bank of Canada keeps the interest rate at the same level. Although vaccines are showing great effectiveness against the virus, distribution and availability of vaccines around the world remain uneven. COVID variants pose a risk to economic activity and health. Despite strong global demand for goods and transportation disruptions due to pandemics are limiting growth. Inflation rates have risen in many countries due to increased energy prices and supply bottlenecks. Although bond yields have increased in recent weeks, the financial environment remains accommodative and continues to support economic activity.

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Article content: The Bank projects that global GDP will rise by 6 percent by 2021, a strong pace, but less than what was projected in the July Monetary Policy Report. It also predicts that it will increase by 4 percent and 3 percent respectively in 2022 and 2023. Canada has seen robust economic growth resume after a period of pause during the second quarter. Recent strong employment gains were concentrated in the hardest-to-distance sector and among those most affected by lockdowns. This has greatly reduced the uneven effects of the pandemic upon workers. It takes time for workers to find the right job and employers to hire the right people as the economy reopens. This is causing labour shortages in some sectors, despite the fact that there is still plenty of labour supply in the overall market.

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Article content. The Bank predicts that Canada's economy will grow by 5% this year, before slowing to 4% in 2022 and 3% in 2023. As the US economy recovers, strong consumption and investment will support demand. Although housing activity has slowed, it is expected to continue rising. The economy's productivity is being limited by a lack of inputs for manufacturing, transportation bottlenecks and difficulty matching workers with jobs. The Bank forecasted a narrower output gap in July, despite not being able to quantify the effect and persistence of these supply factors. Although the recent rise in CPI inflation was expected in July, it appears that the main factors driving up prices, higher energy prices, and pandemic-related supply blockages are now stronger and more persistent than anticipated. The core measures of inflation have increased, but less than the CPI. CPI inflation is expected to rise into next year and then fall back to the target of 2 percent by late 2022. To ensure that inflation expectations and labour costs are not impacted by temporary forces pushing up prices, the Bank closely monitors inflation.

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Article content. The Governing Council believes that the economy still requires substantial monetary policy support due to its excess capacity. The effective lower bound of the policy interest rate will be maintained until the economy absorbs enough excess capacity to achieve the 2 percent inflation target. According to Banks, this will occur sometime between the middle of 2022 and the end of the fourth quarter. The Governing Council decided to stop quantitative easing in light of the positive economic recovery and maintain its overall holdings of Government of Canada bond securities. We will provide adequate monetary policy stimuli to support recovery and reach the inflation target. Dashboard by Tiff Macklems The charts that the Bank of Canada considers when it plans to exit the pandemic.

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