OTTAWA, June 3 (Xinhua) -- The Bank of Canada announced on Wednesday it would keep its interest rate at 0.25 percent.
The Canadian central bank said the impact of the COVID-19 pandemic on the global economy appears to have peaked, but there remains a great deal of uncertainty.
The pandemic has led to historic losses in output and jobs, but the country's economy appears to have avoided its worst-case scenario presented in the bank's April Monetary Policy Report, the bank said.
The bank now expects the country's GDP to decline between 10 percent and 20 percent compared with the fourth quarter of 2019, down from the 15 percent to 30 percent decline forecasted in April.
However, there is some reason for optimism, the bank noted. "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 said it expects the economy to resume growth in the third quarter.
The bank also announced that it is reducing the frequency of its term repo operations and purchases of bankers' acceptances citing improvements in short-term funding conditions.
It said other programs to purchase federal, provincial, and corporate debt will continue unchanged. "As market function improves and containment restrictions ease, the bank's focus will shift to supporting the resumption of growth in output and employment."