The Bank of Canada dropped its forecast for this year’s economic growth while preserving its key interest rate at 0.25%.
The central bank now expects the economy to grow 6.0% in 2021, after previously targeting 6.5% growth.
However, the bank now predicts that the economy will grow 4.6% in 2022, while its preceding forecast was for 3.7% growth.
According to the bank, economic conditions have improved enough to reduce its weekly purchases of federal bonds from $ 3 billion to $ 2 billion. These purchases are a measure intended to support lower interest rates for mortgages and business loans.
The Bank of Canada also expects inflation to be above 3.0% for the rest of the year due to higher prices for gasoline and some nearby services, whose demand is rebounding faster than supply.
In its statement, the central bank said the factors driving inflation up were likely to be transient, but that it would monitor them closely to assess their persistence and magnitude.