The Bank of Canada announced a hold on its key interest rate on Wednesday morning, after eight consecutive rate hikes.
On Jan. 25, the interest rate was increased by 25 basis points, boosting it to 4.5 per cent. Today, the central bank announced it would be holding the rate there for now.
During the previous announcement, the bank revealed it would continue assessing the impact of the hikes on the economy while paying close attention to the effects on spending over the course of the next few months.
According to the January Monetary Policy Report (MPR), global economic growth is continuing to slow down and although inflation is still high, it’s on the decline due to lower energy prices.
“Inflation eased to 5.9% in January, reflecting lower price increases for energy, durable goods and some services,” the Bank of Canada said, in a news release today.
READ MORE: Bank of Canada raises key interest rate for an eighth straight time
During the previous announcement, the bank revealed it would continue assessing the impact of the hikes on the economy while paying close attention to the effects on spending over the course of the next few months.
The price of commodities have roughly aligned with the Bank’s expectations, yet key sources of the upside risk include the strength of China’s recovery and the impact of Russia’s war in Ukraine.
The bank says the latest data remains in line with its prediction that CPI inflation will come down to around three per cent in the middle of the year.
“The Governing Council will continue to assess economic developments and the impact of past interest rate increases, and is prepared to increase the policy rate further if needed to return inflation to the 2% target. The Bank remains resolute in its commitment to restoring price stability for Canadians,” the central bank said.
The next overnight rate target announcement is scheduled for Apr. 12.
