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Essentials of Monetary Policy

Bank of Canada (BoC). As Anticipated, Key Interest Rates Stay at Their Effective Lower Bound

December 9, 2020
François Dupuis • Mathieu D’Anjou • Benoit P. Durocher • Hendrix Vachon

The BoC’s statement accompanying today’s decision didn’t contain any real surprises. As expected, the monetary authorities reiterated their intention to keep key interest rates at their effective lower bound and to continue their quantitative purchases. We should point out that the Canadian economy is still a long way from regaining the ground lost during the Great Lockdown in the spring. Although the second wave of the pandemic recently required new restrictive measures, the economic outlook in the BoC’s October MPR still holds up. Furthermore, a significant slowdown in economic growth is anticipated in late 2020, and the 2021 outlook suggests a difficult start to the year.