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One of the must-watch economic events this week will be the Bank of Canada interest rate decision. The rate decision is due to be announced at 15:00 PM London time on Wednesday.
Why is the announcement important?
A bank interest rate is the rate at which a country’s central bank lends money to local banks. The interest rate is charged by the nation’s central or federal bank on loan advances to control the money supply in the economy and the banking sector. The Bank of Canada has an inflation target of 1% to 3%. The interest rates are changed accordingly to meet the target. The decision to increase, decrease, or maintain the interest rate has a significant impact on financial markets, so it’s one of the most closely watched economic events in the calendar.
Bank of Canada interest rate changes since 2015
In January, we saw the Bank of Canada leave its interest rate unchanged at 0.25%.
It’s expected that the same will happen this month, according to the analysts. In fact, following January’s rate decision the Bank of Canada signalled that rates may remain unchanged until 2023.
”In view of the weakness of near-term growth and the protracted nature of the recovery, the Canadian economy will continue to require extraordinary monetary policy support. 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. In our projection, this does not happen until into 2023”, the bank’s website statement read.
With interest rates likely to remain unchanged, all eyes will be on the statement following the rate announcement, where we may see further comments from the bank about the future outlook for the economy.
You can keep up to date with economic announcements and events by clicking here for our GO Markets Economic Calendar.
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