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Essentials of Monetary Policy

Bank of Canada (BoC). The BoC Cuts Back on Some Market Operations

June 3, 2020
François Dupuis • Mathieu D’Anjou • Benoit P. Durocher • Hendrix Vachon

As expected, the key interest rate remained at its effective lower bound. While it’s clear that the economic conditions have deteriorated significantly in recent months, they did avoid the worst-case scenarios anticipated in the BoC’s most recent MPR. Even if the results for the second quarter will be more negative than those for the first quarter, the gradual lifting of the lockdown more or less throughout the country is reason for optimism. With this in mind, the BoC announced today that it would be cutting back on the frequency of some of its operations. That said, uncertainty remains high, and the pace at which the Canadian economy will recover will depend hugely on how the pandemic evolves.