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Bank Of Canada Keeps Interest Rates Unchanged At 0.25%

The Bank of Canada unexpectedly announced that it will keep interest rates unchanged at 0.25% after its first interest rate meeting this year. But it also announced the removal of special forward-looking guidance that kept rates at the effective lower bound, paving the way for the first rate hike since 2018. The statement after the meeting pointed out that the overall spare capacity of the local economy has been fully digested, and the central bank will at least maintain the current balance sheet size before raising interest rates, suggesting that interest rate hikes and balance sheet reductions may be carried out in the future. As for the inflation outlook, the central bank expects inflation to approach 5% in the first half of the year, before falling back to around 3% reasonably quickly by the end of the year. On the economic front, the central bank expects the economy to grow by about 4% and 3.5% respectively this year and next, which is quite optimistic.
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