UPDATE 1-Bank of Canada watching key export markets in COVID-19 recovery

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By Kelsey Johnson and Julie Gordon

OTTAWA, June 4 (Reuters) – Canada’s central bank sees reason to be optimistic about the country’s economic recovery, but it is keeping a close eye on how COVID-19 is affecting growth and demand in its key export markets, Bank of Canada Deputy Governor Toni Gravelle said on Thursday.

In a speech following the bank’s decision on Wednesday to hold its key interest rate steady, Gravelle made no mention of future policy moves and reiterated the bank thinks 0.25% is as low as rates can go without causing problems for the financial system.

Gravelle said there are clear signs that credit is flowing and financial markets are working well, a key factor in the strength of the recovery, but noted many risks and uncertainties remain.

“We will be paying close attention to how the pandemic is affecting growth and demand in key markets for Canadian exports,” Gravelle told a business audience in Sudbury, Ontario, by video conference.

Trade date released earlier on Thursday showed Canada’s imports and exports plunged in April on falling oil prices and shutdowns tied to the coronavirus pandemic. Trade with the United States, Canada’s largest trading partner, slumped by C$23.4 billion ($17.35 billion). [nL1N2DG24Y[ (Reporting by Kelsey Johnson and Julie Gordon in Ottawa; Editing by Leslie Adler)

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