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MNI BOC Review - January 2021: Rate, QE Both Steady For Now

MNI BOC Review - January 2021: Rate, QE Both Steady For Now

The Bank of Canada kicked off 2021 holding monetary policy steady for the seventh consecutive time Wednesday, January 20, maintaining forward guidance until slack is absorbed.

The Bank remains accommodative, maintaining the overnight rate at 25bp (effective lower bound), rejecting an option to make a micro-cut of 5-10bp. Quantitative easing stimulus (QE) via asset purchases continues at C$4B a week.

However, the Bank did state "the amount of [QE] stimulus needed will diminish over time -- if the economy and inflation play out broadly in line or stronger than we projected". But much depends on the efforts to combat the spread of Covid-19, successful rollout in effective vaccines, in order to ease lockdown measure and revitalize the economy.

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MNI BOC Review - Jan 2021

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