Bank of Canada has no immediate intentions to raise interest rates, Macklem says

Rates would only go up once Canada is well into an economic recovery

Canada’s new top central banker says the Bank of Canada has no intention to raise interest rates given the current economic circumstances created by the COVID-19 pandemic.

Governor Tiff Macklem says the central bank is focused on delivering low interest rates for the foreseeable future to support an economic recovery.

That should also help lower the debt-servicing costs households and businesses face, he says, particularly if they’ve taken out loans to bridge to better times.

Rates would only go up once Canada is well into an economic recovery, which Macklem suggests is still a long way off.

The Bank of Canada has dropped its key interest rate to 0.25 per cent, which it says is as low as it can go, and gone on an unprecedented bond purchasing program to ease credit flows in financial markets.

Macklem made the comments during his first appearance as governor before the House of Commons finance committee — his first public statement since taking the top job on June 3.

“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 Tuesday.

“But we’re in a deep hole, and it’s going to be a long way out of this hole.”

During his appearance, Macklem said the bank’s focus in the initial weeks of the crisis was on restoring orderly market conditions, efforts that seem to be paying off with conditions normalizing.

He says the bank is now turning its focus to the future path of monetary policy, with an important step to be taken next month with the publication of an economic outlook.

The bank’s July monetary policy report will likely again provide best- and worst-case scenarios for the economy rather than hard figures for gross domestic product and inflation because of the unknown course of the pandemic, Macklem says.

He adds the report will also have a discussion about possible risks facing the economy and for the bank in hitting its target inflation rate.

The results of the report will help determine how much monetary stimulus will be needed and for how long, Macklem says.

He also says he expects to see growth in the third quarter of the year given the growth of 290,000 jobs recorded in May, as well as more people looking for work and more working regular hours.

“I think could see some good numbers (in the third quarter), but I would stress that even the good case is still pretty bad,” Macklem said.

The Canadian Press

Like us on Facebook and follow us on Twitter.

Want to support local journalism during the pandemic? Make a donation here.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Comments are closed

Just Posted

Semiahmoo Peninsula girls to host Black Lives Matter fundraiser

‘We are doing this because the world is full of systemic racism,’ organizer Sabine Lapointe said

Community fruit harvest program returns to Surrey, White Rock

Sources will send a team to harvest fruit trees, so less goes to waste

East White Rock crosswalk, speed bumps proposed

Report on costs and implications requested by council

Semi and BMW collide on South Surrey highway

At least one person to hospital, both vehicles sustained significant damage

White Rock dogs-on-promenade survey shows majority approval

City figures suggest that off-season program could continue

B.C. accommodators need phone lines to light up as in-province travel given green light

Travel restrictions during the COVID-19 pandemic have decimated the tourism and hospitality industries

300 Cache Creek residents on evacuation alert due to flood risk as river rises

Heavy rainfall on Canada Day has river rising steadily, threatening 175 properties

Friends, family remember victim of Langley possible triple-homicide fire at memorial

Memorial held for one the of three found dead at a house fire in Langley Meadows last month

Fraser Valley Bandits, CEBL bringing pro sports back later this month

Abbotsford-based basketball team kicks off CEBL Summer Series on July 26

Family and friends mark birthday of teen who died after being discovered in Langley park

Carson Crimeni suffered an apparent drug overdose, his final moments broadcast on social media

First glimpse of Canada’s true COVID-19 infection rate expected mid-July

At least 105,000 Canadians have tested positive for COVID-19 since the coronavirus was identified

Police ramp up efforts to get impaired drivers off B.C. roads this summer

July is dedicated to the Summer CounterAttack Impaired Driving Campaign

Migrant workers stage multi-city action for full status amid COVID-19 risks

‘COVID-19 has exacerbated an existing crisis’

Okanagan school drops ‘Rebels’ sports team name, citing links with U.S. Civil War

Name and formerly-used images “fly in the face” of the district’s human rights policy, says board chair

Most Read

l -->