Rate kept at 0.25% and central bank says it has no plans to slow down bond buying program
The Bank of Canada kept its trend-setting interest rate at the record low of 0.25 per cent on Wednesday, and signalled it plans to continue to do everything it can to stimulate the economy even as there are signs the recovery from COVID-19 is going better than expected.
The bank’s benchmark interest rate, known as the target for the overnight rate, impacts the economy by influencing the rates that people and businesses get at their banks for things like savings accounts and mortgages. Broadly speaking, the central bank cuts its rate to stimulate the economy by making it cheaper to borrow and invest. When it wants to slow down an overheated economy, the central bank raises its rate.
The bank slashed its rate shortly after the pandemic started in March 2020, cutting it by 1.5 percentage points in a few shorts weeks to give the economy stimulus to weather COVID-19.
The bank signaled a few months ago that it has no plans to raise its rate for another two years, and it reiterated that plan on Wednesday.