Bank Of Canada Could Keep Interest Rates Low Until 2023, Experts Say

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Consumer spending is being propped up by government aid, economists say

Royal Bank senior economist Nathan Janzen said consumer demand has held up better than expected over the summer, which has allowed for price growth in some categories as well as letting businesses pass on additional costs.

A key pillar propping up spending has been government aid, including the Canada Emergency Response Benefit that has paid out over $76.4 billion to 8.75 million people since its introduction. Consumer spending, largely due to the rapid roll out of the CERB, has been mostly responsible for keeping the economy afloat since March.An analysis published Tuesday by the Canadian Centre for Policy Alternatives estimated 2.7 million people receiving CERB payments will receive less when the new system kicks in.

The Bank of Canada intends to keep its key policy interest rate at 0.25 per cent, which is as low as it will go, until inflation is back at the central bank’s two per cent target.

 

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