The Bank of Canada (BOC) policy meeting for the March session saw the central bank keep interest rates at 0.25%, although it expects the economy to grow in the first quarter of this year, in contrast to previous forecasts that 2021 will start with a downturn.
In January, the central bank warned that the closure and tightening of coronavirus restrictions in most countries would prompt a contraction in Gross Domestic Product (GDP) readings in the first quarter of 2021.
However, Statistics Canada reports economic growth in the last quarter of 2020 was stronger than expected, and this gives an initial estimate that January will see a small increase even though tight sanctions are still in place.
BOC policymakers said in a statement on Wednesday that economic resilience has to do with consumers and businesses adjusting to new closures and restrictions.
The statement also pointed to a stronger -than -expected housing market as a driver to the expected expansion in GDP in the first three months of the year.
However, the BOC also warned of considerable uncertainty about the long -term economic outlook, including how long it will take for the labor market to recover.
Therefore, the central bank will continue with their current quantitative easing program and as has been said before, the central bank will maintain interest rates until 2023.
In the Asian session, the Canadian dollar traded stronger following the BOC decision, in addition to being supported by the weakening US dollar.
