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Bank Of Canada removes Exceptional Forward Guidance, Overnight Rate Target Kept at 0.25%.

Toronto, Wednesday, 26 January 2022

In its first meeting of 2022, the Bank of Canada kept its overnight rate target at 0.25 percent, as expected, but said it has removed its exceptional forward guidance to keep its policy rate at the effective lower bound, indicating that the overall economic slack has been absorbed, paving the way for the first rate hike since 2018.

The Bank of Canada will also maintain a broadly constant level of Government of Canada bond holdings on its balance sheet, at least until it begins to raise the policy interest rate. On the pricing front, inflation is expected to be close to 5% in the first half of 2022, before falling to around 3% by the end of the year.

Canada's GDP is expected to increase by 4% in 2022 and 3.5 percent in 2023, according to the Bank.

(Source: Bank of Canada)

(Edited by: The Decision Maker)


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