Highlights of the Bank of Canada decision

The Bank of Canada has repeatedly emphasized that 0.25% is its effective lower bound and that it's not actively considering negative rates. There was no hint or expectation of a cut.


  • Incoming data confirm the severe impact of the COVID-19 pandemic on the global economy
  • This impact appears to have peaked
  • The global recovery likely will be protracted and uneven
  • The Canadian economy appears to have avoided the most severe scenario presented in the Bank's April Monetary Policy Report
  • The level of real GDP in the second quarter will likely show a further decline of 10-20 percent (previously the BOC said 15-30%)
  • Buffering the impact of the shutdown on disposable income and helping to lay the foundation for economic recovery
  • BOC expects the economy to resume growth in the third quarter
  • BOC expects temporary factors to keep CPI inflation below the target band in the near term
  • Short-term funding conditions have improved. Therefore, the Bank 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 programs if warranted
  • As market function improves and containment restrictions ease, the Bank'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 the economic recovery is well underway

This was the final decision from Poloz with Macklem attending today as an observer.

The Canadian dollar is higher on the news as the BOC dials down some of the programs and boosts its forecasts. USD/CAD has fallen to 1.3500 from 1.3550.