{"id":7908,"date":"2021-03-10T16:24:59","date_gmt":"2021-03-10T16:24:59","guid":{"rendered":"https:\/\/www.pantheregroup.com\/2021\/03\/10\/bank-of-canada-holds-rate-keeps-up-bond-buying-for-now\/"},"modified":"2021-03-10T16:24:59","modified_gmt":"2021-03-10T16:24:59","slug":"bank-of-canada-holds-rate-keeps-up-bond-buying-for-now","status":"publish","type":"post","link":"https:\/\/www.pantheregroup.com\/2021\/03\/10\/bank-of-canada-holds-rate-keeps-up-bond-buying-for-now\/","title":{"rendered":"Bank of Canada holds rate, keeps up bond buying \u2014 for now"},"content":{"rendered":"<p> \n<\/p>\n<div id=\"\">\n<header aria-label=\"Beginning of Article\" class=\"article-header\">\n<nav aria-label=\"Breadcrumb\" class=\"breadcrumbs\">\n<h2 class=\"visually-hidden\">Breadcrumb Trail Links<\/h2>\n<ol class=\"breadcrumbs__items list-unstyled\">\n<li class=\"breadcrumbs__item\"> News <\/li>\n<li class=\"breadcrumbs__item\"> Economy <\/li>\n<\/ol>\n<\/nav>\n<p class=\"article-subtitle\"> But policy-makers are feeling better about the economy&#8217;s prospects <\/p>\n<div class=\"article-meta\">\n<div class=\"published-by\">\n<p>Author of the article:<\/p>\n<p> <span class=\"published-by__author\">Kevin Carmichael<\/span> <\/div><\/div>\n<figure class=\"featured-image\"><picture class=\"featured-image__ratio featured-image-category__economy\"><source media=\"(min-width: 1200px)\" srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/03\/tiff-macklem0210.jpg?quality=90&amp;strip=all&amp;w=564&amp;type=webp,&#10;            https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/03\/tiff-macklem0210.jpg?quality=90&amp;strip=all&amp;w=1128&amp;type=webp 2x\" type=\"image\/webp\"\/><source media=\"(min-width: 1200px)\" srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/03\/tiff-macklem0210.jpg?quality=90&amp;strip=all&amp;w=564&amp;type=jpg,&#10;            https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/03\/tiff-macklem0210.jpg?quality=90&amp;strip=all&amp;w=1128&amp;type=jpg 2x\" type=\"image\/jpeg\"\/><source media=\"(min-width: 768px)\" srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/03\/tiff-macklem0210.jpg?quality=90&amp;strip=all&amp;w=472&amp;type=webp,&#10;            https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/03\/tiff-macklem0210.jpg?quality=90&amp;strip=all&amp;w=944&amp;type=webp 2x\" type=\"image\/webp\"\/><source media=\"(min-width: 768px)\" srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/03\/tiff-macklem0210.jpg?quality=90&amp;strip=all&amp;w=472&amp;type=jpg,&#10;            https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/03\/tiff-macklem0210.jpg?quality=90&amp;strip=all&amp;w=944&amp;type=jpg 2x\" type=\"image\/jpeg\"\/><source media=\"(max-width: 767px)\" srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/03\/tiff-macklem0210.jpg?quality=90&amp;strip=all&amp;w=288&amp;type=webp,&#10;            https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/03\/tiff-macklem0210.jpg?quality=90&amp;strip=all&amp;w=576&amp;type=webp 2x\" type=\"image\/webp\"\/><\/picture><figcaption class=\"featured-image__caption image-caption\"><span class=\"caption\">Bank of Canada Governor Tiff Macklem. <\/span> <span class=\"credit\">Photo by Reuters\/Blair Gable<\/span> <\/figcaption><\/figure>\n<\/header>\n<section class=\"article-content__content-group\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<p>Canada\u2019s central bank is getting ready to take its foot off the gas, but for now, it intends to proceed at full throttle.<\/p>\n<p data-async=\"\">The Bank of Canada acknowledged in an updated policy statement that the economy will avoid the first-quarter contraction that the institution\u2019s forecasters predicted at the start of the year, perhaps the best indication that policy-makers are feeling better about the country\u2019s prospects. Their latest deliberation coincided with the passage of President Joe Biden\u2019s US$1.9-trillion stimulus package through Congress, representing an historic jolt to the U.S. economy that will generate increased demand for Canadian exports.<\/p>\n<p>\u201cThe economy is proving to be more resilient than anticipated to the second wave of the virus and the associated containment measures,\u201d policy-makers said on March 10. \u201cConsumers and businesses are adapting to containment measures, and housing market activity has been much stronger than expected. Improving foreign demand and higher commodity prices have also brightened the prospects for exports and business investment.\u201d<\/p>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group\">\n<section class=\"ad\">\n<h2 class=\"visually-hidden\">Advertisement<\/h2>\n<div class=\"ad__container\">\n<div class=\"ad__inner\" id=\"ad__inner-1\">\n<div class=\"ad__placeholder\">\n<p> This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<p>Indeed. Gross domestic product jumped to annual rate of 9.6 per cent in the fourth quarter, forcing Bay Street economists to upgrade their outlooks for 2021. Commodity prices have surged along with the global recovery, allowing Canada to record a rare trade surplus in January \u2014 and the widest one since July 2014. The real-estate market is so hot that Bank of Canada Governor Tiff Macklem said last month that he was starting to see early signs of \u201cexcess exuberance.\u201d<\/p>\n<p>Still, the hole left by the COVID-19 crisis is immense and the climb out will be long. Macklem and his deputies on Governing Council mostly brushed aside worries about inflation, which some investors and traders think will soon force central banks to backtrack on their promises to keep interest rates unusually low for another couple of years at least.<\/p>\n<figure class=\"embedded-image\"><picture class=\"embedded-image__ratio\"><source data-srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/03\/fp0310-2021-boc-rate.png?quality=90&amp;strip=all&amp;w=564&amp;type=webp,&#10;            https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/03\/fp0310-2021-boc-rate.png?quality=90&amp;strip=all&amp;w=1128&amp;type=webp 2x\" media=\"(min-width: 1200px)\" srcset=\"https:\/\/financialpost.com\/data:,https:\/\/financialpost.com\/1w\" type=\"image\/webp\"\/><source data-srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/03\/fp0310-2021-boc-rate.png?quality=90&amp;strip=all&amp;w=564&amp;type=jpg,&#10;            https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/03\/fp0310-2021-boc-rate.png?quality=90&amp;strip=all&amp;w=1128&amp;type=jpg 2x\" media=\"(min-width: 1200px)\" srcset=\"https:\/\/financialpost.com\/data:,https:\/\/financialpost.com\/1w\" type=\"image\/jpeg\"\/><source data-srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/03\/fp0310-2021-boc-rate.png?quality=90&amp;strip=all&amp;w=472&amp;type=webp,&#10;            https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/03\/fp0310-2021-boc-rate.png?quality=90&amp;strip=all&amp;w=944&amp;type=webp 2x\" media=\"(min-width: 768px)\" srcset=\"https:\/\/financialpost.com\/data:,https:\/\/financialpost.com\/1w\" type=\"image\/webp\"\/><source data-srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/03\/fp0310-2021-boc-rate.png?quality=90&amp;strip=all&amp;w=472&amp;type=jpg,&#10;            https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/03\/fp0310-2021-boc-rate.png?quality=90&amp;strip=all&amp;w=944&amp;type=jpg 2x\" media=\"(min-width: 768px)\" srcset=\"https:\/\/financialpost.com\/data:,https:\/\/financialpost.com\/1w\" type=\"image\/jpeg\"\/><source data-srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/03\/fp0310-2021-boc-rate.png?quality=90&amp;strip=all&amp;w=288&amp;type=webp,&#10;            https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/03\/fp0310-2021-boc-rate.png?quality=90&amp;strip=all&amp;w=576&amp;type=webp 2x\" media=\"(max-width: 767px)\" srcset=\"https:\/\/financialpost.com\/data:,https:\/\/financialpost.com\/1w\" type=\"image\/webp\"\/><img decoding=\"async\" alt=\"\" class=\"embedded-image__image lazyload\" src=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/03\/fp0310-2021-boc-rate.png?quality=90&amp;strip=all&amp;w=288\" srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/03\/fp0310-2021-boc-rate.png?quality=90&amp;strip=all&amp;w=288,&#10;                https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/03\/fp0310-2021-boc-rate.png?quality=90&amp;strip=all&amp;w=576 2x\" height=\"486\" loading=\"lazy\" width=\"1001\"\/><\/picture><\/figure>\n<p>The Bank of Canada reiterated that it intends to keep the benchmark interest rate at 0.25 per cent until sometime in 2023, and that it will continue to create money to purchase at least $4-billion worth of Government of Canada bonds each week \u201cuntil the recovery is well underway.\u201d It attributed the recent jump in bond yields to repricing related to the \u201cimproved U.S. growth outlook.\u201d Policy-makers observed that inflation, as measured by the Consumer Price Index, is on the low side of their comfort zone, and that they expect economic weakness will continue to exert downward pressure on prices for a while yet.<\/p>\n<p>\u201cWhile economic prospects have improved, the Governing Council judges that the recovery continues to require extraordinary support,\u201d the statement said.<\/p>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group\">\n<section class=\"ad\">\n<h2 class=\"visually-hidden\">Advertisement<\/h2>\n<div class=\"ad__container\">\n<div class=\"ad__inner\" id=\"ad__inner-2\">\n<div class=\"ad__placeholder\">\n<p> This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<section aria-labelledby=\"moreTopicLabel1598473275346741192765756814221634\" class=\"more-topic\" data-carousel-icon-button=\"\" data-carousel-type=\"list\"><button aria-hidden=\"true\" class=\"more-topic__button-prev\" data-carousel-prev=\"\" tabindex=\"-1\" title=\"previous\" type=\"button\"\/><\/p>\n<ol class=\"more-topic__items list-unstyled\" data-carousel-slide-list=\"\" tabindex=\"0\">\n<li class=\"more-topic__item\" data-carousel-item=\"\"><picture class=\"more-topic__item-image\"><img decoding=\"async\" alt=\"Governor of the Bank of Canada Tiff Macklem walks outside the Bank of Canada building in Ottawa.\" class=\"lazyload\" src=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/03\/vw0310boc.jpg?h=96&amp;strip=all&amp;quality=80\" height=\"96\" loading=\"lazy\" srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/03\/vw0310boc.jpg?h=96&amp;strip=all&amp;quality=80,&#10;                                    https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/03\/vw0310boc.jpg?h=192&amp;strip=all&amp;quality=80 2x,&#10;                                    https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/03\/vw0310boc.jpg?h=288&amp;strip=all&amp;quality=80 3x\" width=\"96\"\/><\/picture>\n<h3 class=\"more-topic__item-text\"><span class=\"more-topic__item-text-clamp\"> Bank of Canada maintains interest rate: Read the official statement <\/span><\/h3>\n<\/li>\n<li class=\"more-topic__item\" data-carousel-item=\"\"><picture class=\"more-topic__item-image\"><img decoding=\"async\" alt=\"There's speculation the Bank of Canada could signal plans to pare back the central bank's asset purchases at the next meeting in April.&#10;\" class=\"lazyload\" src=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/03\/boc0310.jpg?h=96&amp;strip=all&amp;quality=80\" height=\"96\" loading=\"lazy\" srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/03\/boc0310.jpg?h=96&amp;strip=all&amp;quality=80,&#10;                                    https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/03\/boc0310.jpg?h=192&amp;strip=all&amp;quality=80 2x,&#10;                                    https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/03\/boc0310.jpg?h=288&amp;strip=all&amp;quality=80 3x\" width=\"96\"\/><\/picture>\n<h3 class=\"more-topic__item-text\"><span class=\"more-topic__item-text-clamp\"> Investors brace for Bank of Canada taper <\/span><\/h3>\n<\/li>\n<li class=\"more-topic__item\" data-carousel-item=\"\"><picture class=\"more-topic__item-image\"><img decoding=\"async\" alt=\"The OECD expects the U.S. recovery will boost Canada's growth by 0.5-1 percentage point.\" class=\"lazyload\" src=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/03\/flags0309.jpg?h=96&amp;strip=all&amp;quality=80\" height=\"96\" loading=\"lazy\" srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/03\/flags0309.jpg?h=96&amp;strip=all&amp;quality=80,&#10;                                    https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/03\/flags0309.jpg?h=192&amp;strip=all&amp;quality=80 2x,&#10;                                    https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/03\/flags0309.jpg?h=288&amp;strip=all&amp;quality=80 3x\" width=\"96\"\/><\/picture>\n<h3 class=\"more-topic__item-text\"><span class=\"more-topic__item-text-clamp\"> OECD doubles U.S. growth forecast, predicting boom will spill over into Canada <\/span><\/h3>\n<\/li>\n<\/ol>\n<p><button aria-hidden=\"true\" class=\"more-topic__button-next\" data-carousel-next=\"\" tabindex=\"-1\" title=\"next\" type=\"button\"\/><\/section>\n<p>Still, the Bank of Canada is keeping on eye on the economic dashboard, where more and more indicators are coming up positive. Policy-makers reiterated that the pledge to keep the benchmark rate near zero is based on their outlook in January, which is now outdated. A continued run of strong numbers could force a tweak to the timing of higher interest rates.<\/p>\n<p>Macklem and his deputies also hinted they could be getting closer to tapering their asset purchases. \u201cAs the Governing Council continues to gain confidence in the strength of the recovery, the pace of net purchases of Government of Canada bonds will be adjusted as required,\u201d they said.<\/p>\n<p>They next meet to discuss interest rates in April. If current trends continue, that adjustment could occur then.<\/p>\n<p data-async=\"\"><em>\u2022 Email: kcarmichael@postmedia.com | Twitter: <a class=\"twitter-follow-button\" data-evt=\"click\" data-evt-typ=\"User Interaction Click\" data-evt-val=\"{\" control_fields=\"\" source=\"\" type=\"\" name=\"\" layout=\"\" element=\"\" feed=\"\" list=\"\" id=\"\" target=\"\" url=\"\" title=\"\" story=\"\" position=\"\" vertical=\"\" pixels=\"\" link=\"\" null=\"\" href=\"https:\/\/twitter.com\/carmichaelkevin\" rel=\"noopener nofollow\">carmichaelkevin<\/a><\/em><\/p>\n<\/section>\n<section class=\"article-content__share-group article-delimiter\" data-evt=\"beforeunload\" data-evt-typ=\"scroll-depth\" data-evt-val=\"{\" control_fields=\"\" of=\"\" page=\"\" viewed=\"\" story=\"\">\n<h2 class=\"visually-hidden\">Share this article in your social network<\/h2>\n<\/section>\n<div class=\"widget article-content__widget-group article-content__widget-group--slot1\">\n<section aria-labelledby=\"TheLogic896142048920918172332910916163187\" class=\"feed-section feed-section--partner-story list-widget--partner-story the-logic\" data-async=\"\">\n<div class=\"widget-title widget-title--partner-story flex-align-center row row--no-padding--left row--no-padding--right\">\n<p> In-depth reporting on the innovation economy from The Logic, brought to you in partnership with the Financial Post. <\/p>\n<\/p><\/div>\n<\/section>\n<\/div>\n<div class=\"widget article-content__widget-group article-content__widget-group--slot2\">\n<section aria-labelledby=\"TopStoriesNewsletter5198928260005697887353926213937584\" class=\"newsletter-widget\" data-account-id=\"b9d3df2fccd108b5eff3c44f573b2cd6\" data-target-list=\"FP_HeadlineNews\" data-widget=\"newsletter\">\n<div class=\"newsletter-widget__body\">\n<h2 id=\"TopStoriesNewsletter5198928260005697887353926213937584\">Top Stories Newsletter<\/h2>\n<p class=\"newsletter-widget__text\">Sign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc.<\/p>\n<div aria-hidden=\"false\" class=\"newsletter-widget__bottom js-form-main\">  <small> By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc. 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