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The Bank of Canada will not increase its asset-purchase program anytime soon, and the country’s gross domestic product should reach pre-COVID-19 levels within two years, economists in a Reuters poll predicted.

Having recorded around 400,000 coronavirus infections, the Canadian government has renewed restrictions in some parts of the country, so economic activity has slowed.

That was despite plans for $100-billion of fiscal stimulus from the government, ultra-low interest rates and a scheduled $16-billion of asset purchases per month by the BoC.

The consensus of the Nov. 27-Dec. 4 Reuters poll of 34 economists showed the central bank would leave its interest rate at 0.25% until the end of 2022. Over 90% of economists, or 20 of 22, who replied to an extra question said the BoC would not increase its quantitative-easing program.

“Monetary policy cannot create demand in this environment – you need actual spending to do that,” said James Knightley, chief international economist at ING. “Interest rates are at record lows and financial conditions are accommodative, so there is little more the BoC can do.”

Core inflation - the central bank’s preferred gauge - was not expected to reach its 2.0% target anytime soon as demand is expected to remain subdued, according to a separate poll.

The Canadian economy rebounded with annualized 40.5% growth last quarter after plunging in the second quarter, but the recovery is still shaky. The economy grew only 0.2% in October and a resurgence in COVID-19 cases has darkened the outlook.

Nearly 60%, or 14 of 24 economists, said Canada’s GDP would take a year or more to reach pre-pandemic levels. Ten respondents said it would within a year.

“While light has finally appeared at the end of the tunnel in the form of vaccine distribution, it will not cure the near-term pain in store for the Canadian economy,” said Sri Thanabalasingam, senior economist at TD.

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