The Bank of Canada has held its target for the overnight rate at the effective lower bound of 0.25 per cent, with the Bank Rate at 0.5 per cent and the deposit rate at 0.25 per cent. With the Bank now absorbing its exceptional forward guidance on its policy interest rate, it has removed its exceptional forward guidance on its policy interest rate. The Bank is keeping its holdings of Government of Canada bonds roughly the same as it goes through its reinvestment phase. We apologize, but this video didn't load.
Here you can see other videos from our team. The official statement The global recovery from the COVID 19 pandemic is strong but uneven, and you can find it by refreshing your browser or Bank of Canada's interest rate. The US economy is growing robust while growth in some other regions appears to be moderate, especially in China due to weakness in its property sector. Inflation in most regions is due to a combination of strong global demand for goods and supply bottlenecks that hinder production and transportation. Oil prices rebounded to well above pre-pandemic levels after a decline in the Omicron variant of COVID-19. Financial conditions remain broadly accommodative, but have tightened with growing expectations that monetary policy will normalize sooner than anticipated, and with rising geopolitical tensions. The Bank expects global GDP growth to be moderate in 2021 to about 3.5 per cent by 2022 and 2023, from 6.75 per cent in 2021 to about 3.5 per cent in 2022 and 2023.
In Canada, GDP growth is stronger than expected in the second half of 2021. The economy entered 2022 with considerable momentum, and a broad set of measures is now showing that economic slack is absorbed. The labour market has tightened significantly with strong employment growth. The hiring intentions are strong, and wage gains are picking up, and job vacancies are elevated. Increased housing market activity is putting upward pressure on house prices. The Omicron variant is weighing on activity in the first quarter. The economic impact will depend on how quickly this wave passes, but it is expected to be less severe than previous waves. Consumer spending on services is expected to spur economic growth and support exports and business investment over the projection horizon. The Bank expects that Canada's economy will grow by 4 per cent in 2022 and about 3.5 per cent in 2023, after GDP growth of 4.5 per cent in 2021.
The core measures of inflation have gone up since October, and CPI inflation is well above the target range. The CPI inflation is expected to stay close to 5 per cent in the first half of 2022 due to the persistent supply constraints on a broader range of goods prices and higher food and energy prices. As supply shortages diminishes, inflation is expected to drop to around 3 per cent by the end of the year and gradually ease towards the target over the projection period. Longer-run expectations have gone up, but longer-run expectations remain anchored on the 2 per cent target. The Bank will use its monetary policy tools to make sure that the higher inflation expectations don't become embedded in ongoing inflation.
What are the things you need to know about the Bank of Canada rate decision today?
What a Bank of Canada rate hike could mean for mortgages and the housing market, while COVID 19 continues to affect economic activity unevenly across sectors, the Governing Council judges that overall slack in the economy is absorbed, thus satisfying the condition outlined in the Bank's forward guidance on its policy interest rate. The Governing Council has decided to end its commitment to hold its policy rate at the effective lower bound. The Governing Council expects interest rates to increase, with the timing and pace of those increases guided by the Bank's commitment to meet the 2 per cent inflation target. The Bank will keep its holdings of Government of Canada bonds on its balance sheet at least until it starts to raise the policy interest rate. The Governing Council will consider exiting the reinvestment phase and reducing the size of its balance sheet by allowing roll-off of maturing Government of Canada bonds at that time.