OTTAWA, June 9 (Xinhua) -- The Bank of Canada announced on Wednesday to keep its interest rate at 0.25 percent where it has been since the onset of the COVID-19 pandemic in March 2020.
The central bank of Canada said that it does not expect to hike interest rates until the second half of 2022 at the earliest. It also maintains its 3 billion Canadian dollars a week target for government bond buying, also known as quantitative easing.
Despite the third wave of COVID-19, the country's GDP growth came to 5.6 percent in the first quarter of 2021, below the bank's 7 percent quarterly growth forecast in April 2021.
"While this was lower than the bank had projected, the underlying details indicate rising confidence and resilient demand. Household spending was stronger than expected, while businesses drew down inventories and increased imports more than anticipated," the bank said in the announcement.
The bank said it expects the Canadian economy to rebound strongly starting this summer as vaccinations proceed at a faster pace and provincial governments ease economic restrictions.
"With vaccinations proceeding at a faster pace, and provincial containment restrictions on an easing path over the summer, the Canadian economy is expected to rebound strongly, led by consumer spending," the bank said.
Housing market activity is expected to moderate but remain elevated. Strong growth in foreign demand and higher commodity prices should also lead to a solid recovery in exports and business investment, it said.
The bank is now balancing recent above-target inflation readings against poor economic data from April and May when much of the country was back in lockdown. Real GDP fell 0.8 percent in April, the first drop in a year.