Bank of Canada holds rates steady, says COVID-19 impact has likely peaked

OTTAWA: The Bank of Canada held its key overnight interest rate steady on Wednesday and said the impact of the coronavirus pandemic on the global economy appears to have peaked, while the Canadian economy seems to have avoided worst-case scenario projections.

The decision to hold rates steady came on the same day new governor Tiff Macklem took helm of the central bank.

The bank slashed rates three times to a record low 0.25pc in March and launched its first ever large-scale bond buying program in response to the coronavirus pandemic and low oil prices.

"In Canada, the pandemic has led to historic losses in output and jobs. Still, the Canadian economy appears to have avoided the most severe scenario," the bank said in its release.

The vast majority of economists polled by Reuters last week said they expect the bank will hold rates at 0.25pc until at least the end of next year, while money markets do not expect any further moves this year.

The Canadian dollar rose to 1.3490 per US dollar, or 74.13 US cents, after the interest rate decision.

Macklem, a long time central banker and former dean of a prominent Canadian business school, takes over from former Governor Stephen Poloz, who retired following a seven-year term on Tuesday.

The central bank has stated it can deliver more monetary stimulus if needed to meet its 2pc inflation target.