The Bank of Canada’s next interest rate decision and economic outlook in mid-July will largely depend on consumer activity and fiscal movements in the next few weeks, according to Toni Gravelle, the central bank’s deputy governor.
Cautiousness is warranted amid the risks and uncertainties arrayed against the Canadian financial system, Gravelle said.
“A lot will depend on whether we as a country are successful in managing the risk of possible future waves of COVID-19, and the pace at which containment measures are lifted,” Gravelle said. “This applies to the global economy as well as Canada’s.”
In the meantime, the bank will focus on maintaining as much stability as possible, considering that the domestic economy saw a 2.1% decline during the first quarter, with a possible 10%-20% drop on the horizon.
Late last month, the BoC’s former governor, Stephen Poloz, said that the institution will continue its program of purchasing Canada Mortgage Bonds, up to $500 million per week.
“This is to support the healthy functioning of an important market for mortgage lending to Canadians,” Poloz said. “Together, all these facilities should improve liquidity and funding conditions for lenders, which will help businesses and households access the credit they need. It will also help Canadians benefit more from our monetary stimulus during the recovery period.”