The Bank of Canada (BoC) left its benchmark interest rates unchanged at 0.25 percent on Wednesday, as widely expected.

In its policy statement, the Canadian central bank noted:

• Incoming data confirm the severe impact of the COVID-19 pandemic on the global economy;
• This impact appears to have peaked, although uncertainty about how the recovery will unfold remains high;
• Global recovery likely will be protracted and uneven since different countries’ containment measures will be lifted at different times;
• In Canada, the pandemic has led to historic losses in output and job;
• Canadian economy, however, appears to have avoided the most severe scenario presented in the Bank’s April Monetary Policy Report (MPR);
• The level of real GDP in the first quarter was 2.1 percent lower than in the fourth quarter of 2019;
• The level of real GDP in the second quarter will likely show a further decline of 10-20 percent;
• BoC expects the economy to resume growth in the third quarter;
• CPI inflation has decreased to near zero, as anticipated in the April MPR;
• BoC expects temporary factors to keep CPI inflation below target band in near term;
• BoC’s programs to improve market function are having their intended effect;
• As short-term funding conditions have improved, BoC is reducing the frequency of its term repo operations to once per week, and its program to purchase bankers’ acceptances to bi-weekly operations;
• BoC stands ready to adjust these programs if market conditions warrant;
• Other programs to purchase federal, provincial, and corporate debt are continuing at their present frequency and scope;
• As market function improves and containment restrictions ease, BoC’s focus will shift to supporting the resumption of growth in output and employment;
• BoC maintains its commitment to continue large-scale asset purchases until economic recovery is well underway;
• Any further policy actions would be calibrated to provide necessary degree of monetary policy accommodation required to achieve inflation target.