Advertisement
Advertisement
Advertisement
Bank of Canada keeps interest rate steady, projecting global GDP growth to moderate

Bank of Canada keeps interest rate steady, projecting global GDP growth to moderate

Bank of Canada keeps interest rate steady, projecting global GDP growth to moderate

Google

Advertisement

OTTAWA, Jan. 26 (Xinhua) — The Bank of Canada announced Wednesday it keeps its trendsetting interest rate steady at 0.25 percent, while projecting global GDP growth to moderate to about 3.5 percent in the next two years and vowing to achieve the 2 percent domestic inflation target.

A statement released by the central bank of Canada said it holds its target for the overnight rate at the “effective lower bound” of 0.25 percent. Overall, the Bank of Canada projected global GDP growth to moderate from 6.75 percent in 2021 to about 3.5 percent in 2022 and 2023.

“The global recovery from the COVID-19 pandemic is strong but uneven. The US economy is growing robustly while growth in some other regions appears more moderate. Strong global demand for goods combined with supply bottlenecks that hinder production and transportation are pushing up inflation in most regions,” the Bank of Canada explained.

In Canada, after GDP growth of 4.5 percent in 2021, it expected Canada’s economy to grow by 4 percent in 2022 and about 3.5 percent in 2023.

“GDP growth in the second half of 2021 now looks to have been even stronger than expected. The economy entered 2022 with considerable momentum, and a broad set of measures are now indicating that economic slack is absorbed,” the statement said. “The Omicron variant is weighing on activity in the first quarter. While its economic impact will depend on how quickly this wave passes, it is expected to be less severe than previous waves. Economic growth is then expected to bounce back and remain robust over the projection horizon, led by consumer spending on services, and supported by strength in exports and business investment.”

Advertisement

According to the statement, with strong employment growth, the labour market in Canada has tightened significantly. Job vacancies are elevated, hiring intentions are strong, and wage gains are picking up. Elevated housing market activity continues to put upward pressure on house prices.

The Bank of Canada admitted that inflation remains well above the target range, warning the consumer price index would close to 5 percent in the first half of 2022.

“As supply shortages diminish, inflation is expected to decline reasonably quickly to about 3% by the end of this year and then gradually ease towards the target over the projection period. Near-term inflation expectations have moved up, but longer-run expectations remain anchored on the 2% target,” the statement projected.

The Bank of Canada reviews its benchmark interest rate eight times a year and considers both local and international, current and potential influences in the reviews. Analysts said several interest rate hikes this year will be expected.

Also Read

Russia, Ukraine hold talks as US warns of invasion
Russia, Ukraine hold talks as US warns of invasion

PARIS, Jan 26, 2022 (AFP) - Top officials from Ukraine and Russia met...

Advertisement
Advertisement
Read More News On

Catch all the International News, Breaking News Event and Latest News Updates on The BOL News


Download The BOL News App to get the Daily News Update & Follow us on Google News.


End of Article

Next Story