The second wave of the virus would have a pronounced impact on economic growth in the short term. The central bank kept its key overnight rate at 0.25 percent but modified its asset purchase program to shift toward longer-term bonds.
The central bank expects a smaller economic contraction in Canada in 2020 than previously forecast, it also notched down its growth outlook for 2021. It did not change its outlook for 2022. It expects economic activity to return to pre-pandemic levels at the start of that year.
The Bank of Canada also said it did not expect the output gap to close until 2023, and forecast overall inflation to remain below its 2 per cent target through 2022.
The Bank noted that its projections assume that new coronavirus outbreaks will be managed through specific containment measures, but said the impacts could be more severe than anticipated. Deaths nationwide topped 10,000 on Tuesday.
Canadian economy will be contracted by 5.7 per cent in 2020, then will grow 4.2 per cent in 2021 and 3.7 per cent in 2022.