Low interest rates will be the norm for the foreseeable future, Bank of Canada Governor Tiff Macklem said earlier this week.
“Some day we will get through this, the economy will be recovered and interest rates will start to move back to more normal levels,” Macklem said in the first public address of his tenure.
Macklem said that the BoC will be focusing on charting the path for the nation’s post-pandemic monetary policy.
This will be outlined in the central bank’s release of an economic outlook next month, The Canadian Press reported.
Despite some recent positive signs, particularly the 290,000 new jobs in May, Macklem said that BoC will have to maintain its current key interest rate (0.25%) to support sustained recovery.
“I think [we] could see some good numbers [in the third quarter], but I would stress that even the good case is still pretty bad,” Macklem said. “We’re in a deep hole, and it’s going to be a long way out of this hole.”
Royce Mendes, an economist at Canadian Imperial Bank of Commerce, mirrored this cautiousness, saying that the gains in May should be weighed against the unprecedented loss of roughly 3 million jobs over March and April.
“The surprisingly positive readings on employment paint a more optimistic picture of the early part of the recovery, but there’s still a long road back,” Mendes told Bloomberg. “The [employment] increase in May only represents 10% of the COVID-19-related job losses and absences that occurred over the prior two months.”
CIBC figures showed that the unemployment rate went up to 13.7% during that month, from 13% in April.