The Bank of Canada has reconfirmed its pledge to keep interest rates at historic lows for many years to come.
In its latest decision, the central bank held its benchmark interest rate at 0.25% and said it plans to leave that rate unchanged until economic slack is absorbed so that the 2% inflation target is "sustainably achieved."
The Bank of Canada also pledged to continue buying government bonds at the current pace and maintain extraordinary monetary policy stimulus throughout what it calls the "recuperation phase" of the COVID-19 recovery. However, the central bank said it could adjust its bond purchase program moving forward.
The accommodative stance is largely unchanged from the last policy statement in July. However, the central bank removed language about being prepared to offer more stimulus if necessary. It also said bond purchases will be "calibrated" to provide needed stimulus.
Canada’s dollar rose 0.6% to $1.3160 against the U.S. dollar in Toronto trading on the latest interest rate decision. Yields on government 10-year bonds rose two basis points to 0.59%. The central bank’s commitment could keep the policy rate unchanged until at least 2023, based on forecasts released in July.
