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

Four members of Nelson and District Women’s Centre board resign

Centre is closed during COVID-19 and is currently hiring an executive director

Reflecting on former Kootenay MLA Ed Conroy’s legacy

Former BC cabinet minister and Kootenay MLA Ed Conroy passed away June 26

Civic Theatre gets $2.7 million to add two more screens

The grant will allow two small theatres to be built in the back of the current auditorium

Salmo RCMP arrest three, seize $15,000

The three adult men have been charged with “Conspiracy to Commit an Offence.”

Nelson graduate student wins prestigious Vanier Scholarship

Sienna Drake, studying at McGill University, will receive $50,000 per year for the next three years

Police issue warning after baby comes across suspected drugs in Kamloops park

The 11-month-old girl’s mother posted photos on social media showing a small plastic bag containing a purple substance

Collision results in train derailment just east of Golden

The derailment occurred Sunday night, according to a statement from CP

Lower Mainland woman says llama farming neighbour shot her 11-month-old pup

Young dog was on owner’s Maple Ridge property when it was killed on June 21

B.C. records 31 new cases, six deaths over three days due to COVID-19

There are 166 active cases in B.C., 16 people in hospital

B.C. highway widening job reduced, costs still up $61 million

Union-only project scales back work to widen Trans-Canada

Greater Victoria nanny pleads guilty to child porn, sexual interference charges

Johnathon Lee Robichaud pleaded guilty to slew of sex crimes

Most Read