Bank Of Canada Keeps Interest Rates Unchanged At 0.25% / China’s May Producer Price Index Records Biggest Growth in 12 Years

After the interest rate meeting, the Bank of Canada announced that it would maintain interest rates unchanged at 0.25% and maintain a minimum weekly asset purchase of 3 billion Canadian dollars. The Bank of Canada stated that there is still considerable overcapacity in the local economy, so the recovery still needs special monetary policy support. In addition, the central bank will strive to maintain the policy interest rate at the effective lower limit until the remaining capacity is absorbed, so as to achieve the 2% inflation target in a sustainable manner. However, the central bank estimates that with more widespread vaccination and the removal of epidemic restrictions, the Canadian economy is expected to rebound strongly this summer, driven by consumer spending. Although the Central Bank of Canada remains optimistic about the economic outlook, it has not hinted at further policy tightening, reflecting that the central bank is not in a hurry to accelerate the pace of policy tightening.

China’s production price index rose sharply year-on-year to 9% in May, the largest increase in the past 12 years. Recall that it was 6.8% in April. According to the National Bureau of Statistics, the rise in production prices is mainly due to the rise in prices of oil, iron ore and non-ferrous metals. On a month-on-month basis, the domestic production price index also increased by 1.6%. Fortunately, the current rise in the production price index has not yet affected the consumption level. The domestic consumer price index in May was only 1.3% year-on-year, and it was 0.9% in April. In order to reduce import inflation, we are now concerned about whether the People’s Bank of China will allow the renminbi to rise by more than one point in order to suppress commodity import inflation.