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

Building to begin on Okanagan Rail Trail washroom

Project starts Monday, July 13, in Coldstream between Westkal Road and Kickwillie Loop

Campfires pop up at North Okanagan alternative summer camp

MacKenzie Camp near Mabel Lake in Enderby still trying fun things for summer despite COVID-19

Ex-Vernon Mountie forfeits 20 days’ pay after sexual misconduct review

A former Vernon RCMP constable made sexual comments, grabbed genitals of male officer in two incidents 10 years ago

Man found dead on Lake Country trail identified as Hollywood actor

GoFundMe campaign launched for man found dead at summit of Spion Kop

Innovation Centre prepares to open doors to Vernon co-workers

Former restaurant re-imagined to host ideas from Vernon’s ‘hidden’ home-based workforce

The pandemic is widening Canada’s workplace gender gap

Gender pay gap is incentivizing fathers to work while mothers watch children, a new B.C. study has found

Security guard assaulted in Kamloops park thanks police, public for quick arrest

Glen Warner, 71, was attacked on July 2 by a man who was asked by Warner to not smoke

Portraits celebrating Syilx culture now on display at Kelowna International Airport

Sheldon Pierre Louis’ art will be on display at YLW from now until July 2021

After slow start, Summerland sees more tourism activity

Majority of visitors come from within British Columbia

EDITORIAL: Accommodating Okanagan fruit pickers

Campsite for agricultural workers to open in Summerland

Deer and moose die after being chased by dogs in South Okanagan

BC conservation officers are asking the public to control their pets

3 people dead in Prince George motel fire

Fire personnel believe the blaze was suspicious although investigation in early stages

B.C. sets terms to review police, mental health, race relations

MLAs to recommend Police Act changes by May 2021

Trail RCMP officer accused of criminal harassment, forcible entry

BCPS: The charges against Murchie date between 2017 and 2020

Most Read