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Bank of Canada keeps rate unchanged as Tiff Macklem begins his term as governor

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(Kitco News) The Bank of Canada (BoC) has kept its key interest rate unchanged at 0.25% as the central bank said goodbye to now former governor Stephen Poloz and welcomed Tiff Macklem as the new head of the central bank.

Poloz’s seven-year tenure ended at midnight after spending the last day deliberating the latest interest rate decision. Macklem participated as an observer during the monetary policy meeting and was in charge of posting the decision on the Bank of Canada’s website during his first day.

Aside from keeping its key interest rate unchanged, the central bank said that it is scaling back some market operations, citing improving financial conditions. 

“The Bank’s programs to improve market function are having their intended effect. After significant strains in March, 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. The Bank stands ready to adjust these programs if market conditions warrant. Meanwhile, its other programs to purchase federal, provincial, and corporate debt are continuing at their present frequency and scope,” the BoC’s press release said.

Canada’s central bank highlighted that even though it is still uncertain how the economic recovery following COVID-19 shutdown will unfold, Canadian economy is expected to begin to grow in the third quarter.

“Decisive and targeted fiscal actions, combined with lower interest rates, are buffering the impact of the shutdown on disposable income and helping to lay the foundation for economic recovery. While the outlook for the second half of 2020 and beyond remains heavily clouded, the Bank expects the economy to resume growth in the third quarter,” the press release stated.

The BoC also pointed to improving financial conditions while warning that the global recovery is looking to be “protracted and uneven.”

Spot gold in Canadian dollar terms saw more losses after the interest rate announcement, last trading at $2,296.14, down 1.59% on the day.

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