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INSTANT VIEW-Bank of Canada Bank says economy will continue to require extraordinary support

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TORONTO, Sept 9 (Reuters) - Bank of Canada held interest rate steady at 0.25% on Wednesday and said the economy will continue to require extraordinary monetary policy support to recover from the pandemic-induced slump.

STORY:

MARKET REACTION: CAD/

LINK: here

COMMENTARY

JOSH NYE, SENIOR ECONOMIST, RBC:

“The Canadian economy contracted a bit less in Q2 than the Bank of Canada was projecting, and it does look like the Q3 rebound is going to be a bit stronger than they assumed in July, and they’ve made note of that, but they’re sort of tempering that optimism by continuing to say that the recuperation phase from here will be quite a bit slower and more uneven than the early stages of the recovery. So not really all that much of a change in tone from the July meeting, despite some slightly better numbers than the Bank was expecting at that time.”

ANDREW KELVIN, CHIEF CANADA STRATEGIST AT TD SECURITIES:

“No surprises, which is nice. It has been a while since we’ve had a placeholder meeting. They kept the forward guidance in place which they had to do. It would have been a huge blow to their credibility to change it. There is no changes in QE and the forward guidance around QE didn’t change either. They’ve noted that economic activity is a bit stronger perhaps than had been expected. They note that there are some headwinds facing the economy still and that growth will slow and it’s all very consensus like.”

“No changes to policy and no real surprises and we will just see what will happen in October.”

DOUGLAS PORTER, BANK OF MONTREAL CHIEF ECONOMIST:

“There’s really no surprise here. Markets were of course expecting nothing on the rates and were doubtful that there would be any change whatsoever in terms of the bond buying program, which is exactly what we’ve seen.”

“I think that overall things have generally unfolded a bit better than they had expected (in July), not radically different, but a little bit better. ... I don’t think there’s a significant change in tone overall. To me it’s more of a recognition of what’s clearly unfolded in the last couple of months.” (Reporting by Jeff Lewis, Fergal Smith and Allison Martell Editing by Denny Thomas)

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