Bank of Canada Reeps Interest Rates Unchanged, Warns of Omicron Uncertainty

The Bank of Canada on Wednesday held its key overnight interest rate unchanged, as expected, and said inflation was broadening even as it warned that the Omicron coronavirus variant has created "renewed uncertainty," Reuters reported The central bank, in a regular rate decision, left its key overnight interest rate at 0.25% and maintained guidance that economic slack would be absorbed in the "middle quarters" of 2022, setting the stage for a first rate hike as soon as April. But it dropped a reference to the pressures pushing up prices as being "temporary," while noting employment had returned to pre-pandemic levels, with job vacancies high and wage growth picking up. "Inflation is elevated and the impact of global supply constraints is feeding through to a broader range of goods prices," the Bank of Canada said. "The effects of these constraints on prices will likely take some time to work their way through, given existing supply backlogs." While Canada's economy had "considerable momentum" going into the fourth quarter, the central bank said that Omicron, along with "devastating floods" in British Columbia last month that cut off access to a key port, could hit economic activity. Read more.
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