Bank of Canada plans to keep interest rate near zero until 2023 (via CBC)

The Bank of Canada says it has no plans to change its benchmark interest rate until inflation gets back to two per cent and stays there, something it says isn't likely to happen until 2023.

The central bank said Wednesday it has decided to keep its benchmark interest rate steady at 0.25 per cent. The news was expected by economists, as although the economy is showing signs of recovering from the impact of COVID-19, things are still a long way from normal, so cheap lending will be needed for a long while yet.

The bank outlined a fairly bleak assessment of the worst case scenario when it laid out its last Monetary Report in July. But the roughly eight months since COVID-19 began in Canada have given the bank a clearer picture of how things are shaking out, even if the picture isn't always rosy.

"With more than six months since the onset of the pandemic, the Bank has gained a better understanding of how containment measures and support programs affect the Canadian and global economies," the bank said.

"This, along with more information on medical developments related to COVID-19, allows the bank to now make a reasonable set of assumptions to underpin a base-case forecast."

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