The Bank of Canada will taper its asset purchases again at its July 14 meeting, encouraged by robust growth prospects, according to a Reuters poll of economists who also said a spread of new COVID-19 variants was the top economic risk this year.
After recording its steepest annual decline last year since quarterly data was first noted in 1961, Canada's export-driven economy was forecast to grow 6.2% on average in 2021, the July 5-8 poll of 32 economists showed, marking the fastest annual expansion since 2007.on a rapid vaccination drive and the lifting of some measures, pointing to a broadening economic recovery.
Among the Group of Seven central banks, the BoC was the first to tighten policy when it reduced its weekly asset purchases programme in April. "Our forecasts then assume that the Bank will reduce its purchases to C$1 billion at the October meeting, and bring its purchases to a close by the end of 2021."
The latest Reuters consensus showed the BoC would raise its key interest rate by 25 basis points to 0.50% in the final quarter of next year. The latest positive outlook was driven by a ramp up in the inoculation drive in recent months - with about 70% of Canadians having received at least one dose, according to Reuters' COVID-19 vaccine tracker.
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