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The Bank of Canada on Wednesday signaled it may keep tapering QE and predicted a strong economic rebound that could present conditions for a rate increase in the second half of next year, while holding its 0.25% rate and CAD3 billion of weekly asset purchases.
"With vaccinations proceeding at a faster pace, and provincial containment restrictions on an easing path over the summer, the Canadian economy is expected to rebound strongly, led by consumer spending," the Ottawa-based central bank said in a statement.
"Decisions regarding adjustments to the pace of net bond purchases will be guided by Governing Council's ongoing assessment of the strength and durability of the recovery," policy makers said, a phrase that echoed the April decision when purchases were slimmed from at least CAD4 billion.
Policy makers also reiterated the inflation jump to around 3% is temporary and will slow following the summer.
The statement was on the more hawkish side, given that in recent weeks the economy shifted from surprising gains to disappointments including a fall in April GDP and job losses. The statement also refrained from noting the Canadian dollar's strength that could become a drag on exports and investment, or great danger of overheating during the housing market boom.
The decision to hold the rate and QE was universally expected by economists in an MNI survey.