Bank of Canada Holds Interest Rates, Forecasts GDP Decline in 2020 of Almost 8%

The Bank of Canada today held interest rates steady at 0.25%, which it calls the effective lower bound. In its release announcing the rate, the Bank said "The Governing Council will hold the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2 percent inflation target is sustainably achieved," so we can expect to see this rate for the forseeable future, probably well into 2021. At the same time, the Bank forecast a contraction in GDP for 2020 of 7.8% before returning to growth (5.1% in 2021 and 3.7% in 2022). The Bank will also continue its quantitative easing program. The full press release is available on the Bank's website.