+1 306-773-7285

THE REAL ECONOMY

RSM Canada Financial Conditions Index update
THE REAL ECONOMY | July 19, 2021

At its June policy meeting, the Bank of Canada reiterated its intention to maintain an accommodative monetary policy as uncertainty over the pandemic abates and the economy recovers.

As it has since the pandemic, the bank is keeping its policy rate at near zero to maintain liquidity in the commercial markets while continuing its purchases of long-term securities to pressure interest rates lower and facilitate long-term investment.

As it said in its June policy statement, the bank noted the increased prospects for growth, but also cited the need for a consistent policy in the face of uneven growth among the global economies and the threat of a resurgent virus.

The bank also noted the threat of further shutdowns and an employment rate that remains well below its pre-pandemic level, “with low-wage workers, youth and women continuing to bear the brunt of job losses.”

MIDDLE MARKET INSIGHT
We expect the Bank of Canada will keep its policy rate at the zero bound over the summer, if not into next year.

Because of the slack remaining in the economy, we expect the bank will keep its policy rate at the zero bound over the summer, if not into next year. We also think the bank will wait until the fall before considering altering its asset purchases and will need more time to assess developments in the labour market.

Nevertheless, the bank also noted rising confidence and resilient demand. Vaccinations continue to make it easier for Canadians to live normally again. Though the second-quarter economic data is uneven, the prospect of a safer environment has lifted consumer confidence and retail spending.

Questions?

Contact your trusted Stark & Marsh Advisor or an office close to you.

Source: RSM Canada LLP

Used with permission as a member of RSM Canada Alliance

RSM Canada Financial Conditions Index update

Standard legal disclosure:
RSM Canada Alliance provides its members with access to resources of RSM Canada Operations ULC, RSM Canada LLP and certain of their affiliates (“RSM Canada”). RSM Canada Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM Canada. RSM Canada LLP is the Canadian member firm of RSM International, a global network of independent audit, tax and consulting firms. Members of RSM Canada Alliance have access to RSM International resources through RSM Canada but are not member firms of RSM International. Visit rsmcanada.com/aboutus for more information regarding RSM Canada and RSM International. The RSM trademark is used under license by RSM Canada. RSM Canada Alliance products and services are proprietary to RSM Canada.

Tax Content Disclaimer:
The following disclaimer must be used in addition to the RSM Canada Alliance legal disclosure when repurposing tax content from RSM.
The information contained herein is general in nature and based on authorities that are subject to change. RSM Canada LLP guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. RSM Canada LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein. This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer.

Skip to content