The Bank of
Canada (BoC) maintained its benchmark interest rates at 5.00 per cent on
Wednesday, as widely expected. It was the Bank's sixth straight meeting on hold. The
Canadian central bank also repeated it is continuing its policy of quantitative
tightening.
In its policy
statement, the Canadian central bank noted:
- Canada’s
economic growth stalled in the second half of last year and the economy moved
into excess supply;
- A broad range
of indicators suggest that labour market conditions continue to ease;
- There are
some recent signs that wage pressures are moderating;
- Domestic economic
growth is forecast to pick up in 2024;
- BoC forecasts GDP growth of 1.5% in 2024, 2.2% in 2025,
and 1.9% in 2026;
- BoC expects CPI inflation to be close to 3% during the
first half of this year, move below 2.5% in the second half, and reach the 2%
inflation target in 2025;
- Based on the
outlook, Governing Council decided to hold the policy rate at 5% and to
continue to normalize the Bank’s balance sheet;
- While inflation is still too high and risks remain, CPI
and core inflation have eased further in recent months. Governing Council will
be looking for evidence that this downward momentum is sustained;
- Governing
Council is particularly watching the evolution of core inflation, and continues
to focus on the balance between demand and supply in the economy, inflation
expectations, wage growth, and corporate pricing behaviour