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OTTAWA - The Bank of Canada has set the stage for direct intervention in the financial markets through purchases of government and corporate bonds, announcing that Canada`s capacity to produce has taken a big hit during a severe recession.
The central bank`s long-awaited policy statement Thursday on so-called quantitative and credit easing contained no specific commitment to move into the uncharted waters, but says it may need to if conditions continue to deteriorate.
The recession is much more severe and will last longer than it previously thought, the bank`s governing council said in its April monetary report.
And growth, when it comes, will be more muted in part because plant shutdowns and restructuring in key industries, particularly autos and forestry, have impaired Canada`s ability to produce in the next few years.
"Owing to their scale and abruptness, these changes will have an important effect on the current level of potential output and on its short-term growth rate," the bank said.
Read the full article here.
The central bank`s long-awaited policy statement Thursday on so-called quantitative and credit easing contained no specific commitment to move into the uncharted waters, but says it may need to if conditions continue to deteriorate.
The recession is much more severe and will last longer than it previously thought, the bank`s governing council said in its April monetary report.
And growth, when it comes, will be more muted in part because plant shutdowns and restructuring in key industries, particularly autos and forestry, have impaired Canada`s ability to produce in the next few years.
"Owing to their scale and abruptness, these changes will have an important effect on the current level of potential output and on its short-term growth rate," the bank said.
Read the full article here.