Bank of Canada holds key interest rate at 4.5 per cent
CTV
The Bank of Canada maintained its policy rate at 4.5 per cent, following eight consecutive rate hikes since March. The pause was signalled by the central bank in January, in order to assess the full impacts its monetary policy is having on the Canadian economy.
The Bank of Canada maintained its policy rate at 4.5 per cent, following eight consecutive rate hikes since March. The pause was signalled by the central bank in January, in order to assess the full impacts its monetary policy is having on the Canadian economy.
Growth in the Canadian economy stalled last quarter, with restrictive monetary policy weighing on household spending and business investment.
The current inflation rate sits at 5.9 per cent, reflecting a decrease in prices for energy, durable goods and some services. Despite this, food and shelter costs remain elevated, with food inflation at 10.4 per cent.
The central bank remains confident in its projection that inflation will come down in 2023.
“Overall, the latest data remains in line with the Bank’s expectation that CPI inflation will come down to around 3 per cent in the middle of this year,” the bank said in a news release on Wednesday.
The Canadian labour market remains tight, with 150,000 new jobs added in January and unemployment remaining at a historic low of 5 per cent. Wages continue to increase by 4 to 5 per cent, however the central bank expects these pressures in the labour market to ease with weak economic growth in next few quarters.
“This should moderate wage growth and also increase competitive pressures, making it more difficult for businesses to pass on higher costs to consumers,” the bank said.
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