Analysts predict a Bank of Canada (BOC) policy meeting led by Governor Tiff Macklem will leave interest rates unchanged at 0.25%, and begin to give indications to pull back previously implemented stimulus measures to support the economy.
Since last year, the central bank has bought federal government bonds with a minimum of $ 4 billion per week to help keep borrowing costs low.
Given the rising growth prospects, especially with the recently published Canadian economic data showing encouraging readings, this may force the BOC to act.
According to the latest published data, the Canadian economy is seen to be improving. This can be seen in manufacturing activity has started to show an increase, while Gross Domestic Product (GDP) growth has also beaten market expectations, as well as more trade that has returned to rise.
This development is enough to make the central bank more optimistic than during the policy meeting in January. In fact, the latest coronavirus blockade is also seen to be less effective than expected, and Canada’s vaccination program was launched faster than expected two months ago.
Following that, analysts saw the central bank raise its growth and inflation projections at tonight’s policy meeting.
Still, there is no expectation for an interest rate hike to happen as the central bank has previously said it will not raise it until the economy affected by Covid-19 can be fully remedied.
