The Globe and Mail reports in its Thursday, March 11, edition that the Bank of Canada held fast on its interest rate on Wednesday. The Globe's Mark Rendell writes that BOC kept its policy interest rate at 0.25 per cent, and reiterated that it does not expect to start raising rates until 2023. It also said that it would continue buying $4-billion worth of government of Canada bonds each week, giving few hints as to when it might begin to "taper" its quantitative easing program.
The key question heading into Wednesday was how the bank would navigate growing optimism in the wake of better-than-expected economic data in both Canada and the United States.
Long-term government bond yields have spiked in recent weeks, with the market pricing in faster economic growth, higher inflation and rate hikes as early as next year.
The bank acknowledged the changing outlook while maintaining a somewhat cautious tone because of continuing weakness in the labour market. Analysts suggested that the bank opted for a "do no harm" approach, postponing any meaningful revisions to its outlook and policy position until April 21, when it will publish a new economic forecast alongside its next rate decision.
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