OTTAWA (Reuters) – Canada’s preliminary rebound from the COVID-19 financial disaster was stronger than anticipated, however the second wave is poised to trigger a “extra pronounced” near-term slowing within the recuperation part, the Financial institution of Canada mentioned on Wednesday.

The central financial institution expects a smaller financial contraction in Canada in 2020, as in contrast with its July replace, adopted by slower than beforehand forecast financial progress in 2021. It didn’t change its progress outlook for 2022, with financial exercise set to return to pre-pandemic ranges at the beginning of that 12 months.

The Financial institution famous its projections assume new outbreaks might be managed by native and focused containment measures, however mentioned the impacts might be extra extreme than anticipated.

“There’s a severe threat, nevertheless, that broader or extra intensive restrictions might be required,” it mentioned in its quarterly Financial Coverage Report.

The financial institution additionally mentioned it didn’t anticipate the output hole to shut till 2023. It forecast total inflation to stay beneath its 2% goal by way of 2022.

(Reporting by Julie Gordon and David Ljunggren; Reuters Ottawa bureau; julie.gordon@tr.com, 647 480 7891)