Bank of Canada Ups 2021 GDP Growth Estimate

The Bank of Canada yesterday announced it is continuing to keep interest rates at the lower effective bound of 0.25% and is scaling back its quantitative easing (QE) support - purchases of Government of Canada bonds - from $4 billion to $3 billion per week, effective April 26. They have also scaled up their forecast for GDP growth to 6.50% in 2021 - a significant increase over the 4.0% growth forecast in their January 2021 Monetary Policy Report (MPR). The Bank now anticipates growth moderating to 3.75% in 2022 and 3.25% in 2023; the January MPR had estimted 4.8% and 2.5% respectively. The announcement calls for inflation to return to a sustainable 2% (the midpoint in the Bank's inflation-control range) in the second half of 2022 and implies that interest rates could rise at that time. The Bank notes this forecast of recovery is sensitive to the continuing evolution of the pandemic and the pace of vaccinations. You can read the announcement here.