Bank of Canada Reaffirms Its Low-Rate Outlook

Bank of Canada Reaffirms Its Low-Rate Outlook

The Bank of Canada has warned that the country's economic recovery will be "heavily reliant on policy support" despite a booming housing market and rapid job recuperation. The Bank left the key lending rate unchanged at its "effective lower bound" of 0.25%, and reaffirmed its commitment to its quantitative easing (QE) program and to keeping interest rates low to stimulate economic activity. It has been doing this by purchasing $5 billion worth of government bonds each week, which has flooded the market with additional liquidity and kept fixed rates lower. Bond yields were little changed following the announcement, meaning the Bank's announcement didn't change the market's future interest rate expectations. Negative interest rates seem firmly off the table now.