OTTAWA, June 3 — The Bank of Canada today held its key lending rate at a record low 0.25 per cent, saying the Covid-19 pandemic’s devastation on the global economy appears to have peaked.
It said it was scaling back unprecedented measures to keep financial markets functioning, as a result, but warned that the recovery will be uncertain.
“Incoming data confirm the severe impact of the Covid-19 pandemic on the global economy. This impact appears to have peaked, although uncertainty about how the recovery will unfold remains high,” the central bank said in a statement.
“Financial conditions have improved, and commodity prices have risen in recent weeks after falling sharply earlier this year,” it added.
Because countries have planned the lifting of virus containment measures at different times, it said “the global recovery likely will be protracted and uneven.”
Canada has recorded historic output and job losses, but avoided the worse-case scenario, the bank said, updating its second quarter growth figures to decline between 10 and 20 per cent — down from 15 to 30 per cent forecast last month.
The economy would still likely resume growth in the third quarter, it added.
The announcement marked the first day on the job for new bank governor Tiff Macklem, who replaces retiring Stephen Poloz. — AFP