The Globe and Mail reports in its Thursday edition that the Bank of Canada took another step in unwinding its emergency stimulus and raised its forecast for inflation Wednesday.
The Globe's Mark Rendell writes that the BOC cut its government bond purchases to a target of $2-billion a week, from $3-billion. It held its policy rate at 0.25 per cent and reaffirmed it does not expect to raise interest rates before the second half of 2022.
Businesses are reopening and hiring workers. Consumer confidence is back to prepandemic levels, and the bank now expects people to spend a significant portion of their extra savings over the coming quarters.
Governor Tiff Macklem says the BOC "is increasingly confident that growth will rebound strongly as the economy once again reopens, and this time growth will be more durable."
The bank's decision to taper its federal government bond-buying program for the second time this year moves it further ahead of other central banks in tightening monetary policy.
The BOC raised its own inflation expectations on Wednesday. It now expects consumer price index inflation to remain above 3 per cent for the rest of the year before dropping down close to 2 per cent next year.
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