The Bank of Canada (BoC) announced today that it would hold interest rates steady at five percent, in line with expectations.
This is the fifth consecutive BoC meeting which has resulted in no change to the country’s interest rates. Read about the previous meetings and effects on the CAD here.
The BoC had this to say in connection with the announcement:
The Bank is continuing its policy of quantitative tightening. Global economic growth continues to slow, with inflation easing gradually across most economies. While growth in the United States has been stronger than expected, it is anticipated to slow in 2024, with weakening consumer spending and business investment.”
Rate cuts nowhere in sight
Governor of the BoC Tiff Macklem gave a surprisingly hawkish opening statement at the bank’s press conference announcing the interest rate this afternoon:
[Today’s decision] doesn’t mean we have ruled out further policy rate increases. If new developments push inflation higher, we may still need to raise rates. But what it does mean is that if the economy evolves broadly in line with the projection we published today, I expect future discussions will be about how long we maintain the policy rate at 5%. Governing Council is concerned about the persistence of underlying inflation. We want to see inflationary pressures continue to ease and clear downward momentum in underlying inflation.”
With persisting worries about inflation from the governor, it seems that – contrary to what some consumers are hoping – the BoC is unlikely to drop interest rates in the near future.
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