The Bank of Canada once again opted for the status quo on Wednesday, deciding to maintain its key rate at 5% for the fifth consecutive time in the hope of combating inflation.
The last increase in the key rate dates back to last July.
The Bank of Canada (BoC) says global economic expansion “slowed in the fourth quarter.”
In Canada, the economy “performed better than expected, but its pace remained weak and below its potential,” it was specified.
“The rise in housing costs remains high and is the factor that contributes the most to inflation,” underlined the Bank of Canada, which still expects inflation to remain close to 3% in the first half of 2024, then gradually decreases.
Even though it decided to maintain its key rate at 5%, the Bank of Canada said it was “concerned about the risks surrounding the inflation outlook.”
“The overall message from the Bank is that it will continue to wait and see. She wants clear data showing that inflation has been eradicated., commented Philippe Simard, mortgage director in Quebec at Ratehub.ca, believing that Canadians should expect rates to remain high.
“All those who have a variable rate or a mortgage line of credit will probably be disappointed that there is no indication of the date of the first reduction in the key rate,” he said, judging that the Short-term fixed mortgage rates “will remain popular in anticipation of possible policy rate cuts.”
For his part, the senior director, Canadian economy at Desjardins, Randall Bartlett, believes that “by recognizing the progress made”, the Bank of Canada is “preparing the ground for future rate cuts”.
The expert also believes that a first reduction will be announced in June.
Remember that since July 12, 2023, after two consecutive quarter-point increases, the Bank of Canada has decided to maintain its key rate at 5%. The next update will be on April 10, 2024.