The Bank of Canada kept its benchmark interest rate steady at 0.25 per cent on Wednesday, noting that while the economy is improving in line with vaccinations, coronavirus variants are making recovery uncertain.
The central bank said Wednesday that it has no plans to raise its benchmark interest rate until Canada’s inflation rate shows signs of settling in at around two per cent.
Official data shows the inflation rate is currently at its highest level in a decade at 3.4 per cent. However the bank believes the pike is only temporary and will come back into a more normal range once “transitory” imbalances in things like supply and demand for consumer goods, shipping bottlenecks and a global shortage of semiconductors level off.
Canada’s GDP shrank by 0.3% in April as COVID-19 continues to impact the economy
The bank’s benchmark rate impacts the rates that borrowers and savers get from retail banks on things like variable rate mortgages, lines of credit and savings accounts.