The Bank of Canada kept its key interest rate target on hold as it said it believes the economy has avoided its worst-case scenario due to the pandemic.

The central bank said Wednesday its target for the overnight rate will remain at 0.25 per cent.

It said the impact of the pandemic on the global economy appears to have peaked, although uncertainty about how the recovery will unfold remains high.

The bank said it believes Canada has avoided the most severe economic scenario painted that it painted in April, updating its GDP figures for the second quarter of the year.

The central bank now expects GDP to decline between 10 and 20 per cent compared with the fourth quarter of 2019, down from the 15 to 30 per cent decline forecasted in April.

In a statement announcing the rate decision, the central bank said it still expects the economy to resume growth in the third quarter.

B次元官网网址淒ecisive and targeted fiscal actions, combined with lower interest rates, are buffering the impact of the shutdown on disposable income and helping to lay the foundation for economic recovery,B次元官网网址� the statement said.

The announcement comes on the first day of Tiff MacklemB次元官网网址檚 tenure as governor, taking over from Stephen Poloz whose seven-year term ended Tuesday.

Macklem participated as an observer during deliberations by the bankB次元官网网址檚 governing council over the past few days, the statement says, adding that the new governor B次元官网网址渆ndorses the rate decision and measures announced.B次元官网网址�

The bank also announced it was reducing the frequency of its term repo operations and purchases of bankersB次元官网网址� acceptances citing improvements in short-term funding conditions.

Other programs to purchase federal, provincial, and corporate debt will continue unchanged, the bank says, but adds it could change tactics in response to economic conditions.

B次元官网网址淎s market function improves and containment restrictions ease, the BankB次元官网网址檚 focus will shift to supporting the resumption of growth in output and employment,B次元官网网址� the statement says. B次元官网网址淭he Bank maintains its commitment to continue large-scale asset purchases until the economic recovery is well underway.B次元官网网址�

Economic reports continue this week with Statistics CanadaB次元官网网址檚 look at the May jobs market scheduled for release Friday.

The Canadian Press

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