Bank of Canada keeps key interest rate target on hold

BY THE CANADIAN PRESS

Posted Jan 20, 2021 8:24 am MST

Last Updated Jan 20, 2021 at 12:05 pm MST

OTTAWA – The Bank of Canada is keeping its key interest rate target on hold at 0.25 per cent.

The central bank is citing the economic conditions and ongoing uncertainty from the pandemic as reasons for its decision.

It also says that the earlier-than-anticipated arrival of vaccines has reduced economic uncertainty from “extreme levels.”

Still, the bank says today it expects the Canadian economy to contract in the first quarter of 2021.

The bank forecasts real gross domestic product will decline by 2.9 per cent in the first quarter of the year compared to the same period in 2020, before improving thereafter if severe restrictions start easing in February.

The bank is forecasting growth of four per cent this year, then 4.8 per cent next year, and finally 2.5 per cent in 2023.