China News Agency, Toronto, July 15 (Reporter Yu Ruidong) The Bank of Canada announced on July 15 that it would maintain the benchmark interest rate, the overnight lending rate, at 0.25%. At the same time, the bank predicts that Canada's GDP will fall by 7.8% this year.
The Bank of Canada said that its short-term liquidity plan aimed at improving market operations since March has achieved the expected results. However, as the market pressure eased, the use of the plan has shrunk. At this stage, the central bank will keep interest rates low to stimulate economic recovery, while continuing to implement quantitative easing, buying at least 5 billion Canadian dollars of government bond assets every week.
The central bank said that the global economy is currently recovering after a severe fall in the first half of this year. The current financial situation in Canada has improved, and the prices of most commodities, including oil, are recovering from low levels. However, due to unpredictable development prospects of the new crown epidemic, the global and Canadian economies still face great uncertainty.
The Bank of Canada's July monetary policy report released on the same day predicted that without a large-scale second wave of outbreaks, the overall global economy would decline by 5% in 2020, with an average growth of about 5% in 2021 and 2022. However, the recovery time and speed will not be the same in all regions.
The report predicts that Canada’s real GDP will decline by 7.8% this year, and will resume growth of 5.1% in 2021 and 3.7% in 2022. As the recovery of demand will lag behind the recovery of supply, the economy will still face huge non-inflationary pressures.
Canada’s economic activity in the second quarter of this year is estimated to have dropped by 15% from the end of 2019, the worst decline since the Great Depression. Data show that the country's economy fell to the bottom in April. Employment resumed growth from May. The Bank of Canada expects employment and output to continue to rebound strongly in the third quarter.
Bank of Canada Governor Tiff Macklem said he believes that economic activity will still take a long time to return to pre-epidemic levels. Canada’s inflation rate is currently close to zero and is expected to remain weak for some time. The Bank of Canada is prepared to provide further monetary stimulus measures to support the economic recovery when necessary and return inflation to the 2% target.
In addition, the Canadian Federal Bureau of Statistics released data on the manufacturing survey on the 15th. In May this year, Canadian manufacturing sales were 40.2 billion Canadian dollars, an increase of 10.7% from the previous month. Led by the automotive and auto parts, petroleum and coal products industries, 18 of 21 industries achieved sales growth. In April, the number fell by a record 28%. However, manufacturing sales in May were still 28.4% lower than in February before the outbreak.
In March of this year, in response to the impact of the epidemic, the Canadian central bank cut interest rates three times in a row, lowering the benchmark interest rate from 1.75% to 0.25%. The bank's next announcement of the benchmark interest rate is September 9. (Finish)