The Bank of Canada is holding its overnight rate at 0.25 per cent and continuing its quantitative easing program (QE) at its current pace.
“The Bank is maintaining its extraordinary forward guidance, reinforced and supplemented by its quantitative easing (QE) program, which continues at its current pace of at least $4 billion per week,” it said in a release.
Canada’s central bank says the program will continue until economic recovery is well underway.
“As the Governing Council continues to gain confidence in the strength of the recovery, the pace of net purchases of Government of Canada bonds will be adjusted as required. We will continue to provide the appropriate degree of monetary policy stimulus to support the recovery and achieve the inflation objective,” it said.
The Bank of Canada’s measures have widely been seen as fuel for the housing market’s improbable boom during the pandemic, but the central bank says it's surprised by the strength.
“Consumers and businesses are adapting to containment measures, and housing market activity has been much stronger than expected,” it said.
The Bank of Canada says while the economy is more resilient than expected during the second wave, there’s still slack and uncertainty.
“The labour market is a long way from recovery, with employment still well below pre-COVID levels,” it said.
“Low-wage workers, young people and women have borne the brunt of the job losses. The spread of more transmissible variants of the virus poses the largest downside risk to activity, as localized outbreaks and restrictions could restrain growth and add choppiness to the recovery.”
CIBC senior economist Royce Mendes says today's statement walks a tightrope as bond yields rise.
"The short statement seems to have taken a do no harm approach, kicking the can down the road until April to make any changes to the conditional commitment or pace of bond purchases. The central bank will have an easier time altering both by then since there will be a full set of new projections to accompany the announcement," he said in a note.
"There will also be fewer assets maturing from the central bank's balance sheet, making it easier to taper gross bond purchases while still growing the overall balance sheet. Canadian fixed income yields have fallen slightly and the loonie is a bit weaker following the release."
Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.
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