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The Governor of the Bank of Canada is a person who is in charge of the Bank of Outside the Bank of Canada headquarters in Ottawa, Ontario, Canada, Tiff Macklem walks. The date is June 22, 2020. Blair Gable/Reuters /File Image (Reuters) – OTTAWA, July 14 (Reuters) – The Bank of Canada maintained interest rates unchanged and decreased its bond-buying program on Wednesday, saying the economy required less assistance as it recovered from the COVID-19 outbreak, but cautioned that inflation would be higher in the near term than originally predicted. Economic growth should perk up in the third quarter of 2021, according to the central bank, after being weaker than predicted in the first half of the year. It kept its benchmark overnight interest rate at a record low of 0.25 percent, as expected, and reduced its weekly net purchases of Canadian government bonds from C$3 billion to a target of C$2 billion. In a statement, the bank stated, “This adjustment reflects ongoing progress toward recovery and the Bank’s enhanced confidence in the strength of the Canadian economic outlook.” Separately, it claimed that COVID-19’s third wave has hindered Canada’s economic growth. “However, these negative effects are diminishing, and the pandemic’s downside risks have greatly decreased,” the Bank wrote in its summer monetary policy report. On temporary variables connected to the pandemic, inflation is now likely to linger at or over 3% – the top of the central bank’s 1 percent -3 percent inflation control range – through the whole of 2021, before dropping back to the 2% objective by 2022 as those causes dissipate. While the Bank has opened the door to the possibility that higher inflation could last longer than predicted, economists said the pressure was still only temporary. “There’s no sign that these high inflation readings are pushing the bank to rethink its monetary policy,” said Royal Bank of Canada senior economist Josh Nye. Indeed, the central bank reaffirmed its forward guidance, predicting that economic slack will be absorbed sometime in the second half of 2022. Estimated timings are still “very imprecise,” according to the report. It now predicts the Canadian economy to grow at 6.0 percent in 2021, down from 6.5 percent in April. It raised its growth forecast for 2022 from 3.7 percent to 4.6 percent. In the third quarter of 2021, Canada is expected to attain broad COVID-19 immunity, which will boost consumer confidence. Over the projection horizon, the economic recovery is likely to become more broad-based and self-sustaining, with a considerable rebound in employment expected in the coming months. On Wednesday, the Canadian dollar was barely altered, trading at 1.2510 to the US dollar, or 79.93 cents. Steve Scherer in Ottawa and Nia Williams in Calgary contributed additional reporting, and Paul Simao edited the piece. The Thomson Reuters Trust Principles are our standards./nRead More

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