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(UPDATE: March 6 @ 7:03 am): The Bank of Canada has held its key interest rate at five per cent.
It also pledged to continue its policy of "quantitative tightening" – that is, attempting to reduce the money supply in the economy.
The Bank said it wants to "normalize" its balance sheet and stressed it remains "concerned about risks to the outlook for inflation."
In a statement released this morning, the Bank said growth in Canada remains "weak and below potential."
"Employment continues to grow more slowly than the population, and there are now some signs that wage pressures may be easing," it added.
"Overall, the data point to an economy in modest excess supply."
Photo credit: Canadian Press
The Bank pointed out that while inflation declined to 2.9 per cent in January, "underlying inflationary pressures persist," with core inflation between 3–3.5 per cent according to certain metrics.
It highlighted that housing remains "elevated" and is the biggest contributor to inflation.
"The Bank continues to expect inflation to remain close to 3% during the first half of this year before gradually easing," the statement reads.
In a report issued on Tuesday, the parliamentary budget officer predicted that inflation would return to two per cent by the end of 2024.
The Bank said this morning it wants to see "further and sustained easing in core inflation" before lowering the interest rate.
It added that it "continues to focus on the balance between demand and supply in the economy, inflation expectations, wage growth, and corporate pricing behaviour."
The next rate announcement is scheduled for April 10.
(Original story: March 6 @ 5:18 am): The Bank of Canada is set to announce its interest rate decision this morning.
Economists widely expect the central bank to maintain its key interest rate at five per cent, despite signs inflation is cooling.
Canada’s inflation rate dropped to 2.9 per cent in January as price pressures eased across the economy.
The Bank of Canada has signalled it wants to see sustained declines in inflation before pivoting to rate cuts.
Forecasters expect the central bank to begin lowering interest rates around the middle of the year.
The slowdown in the Canadian economy is expected to pave the way to lower interest rates by putting downward pressure on price growth.
– With files from Canadian Press
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