The Bank of Canada maintains its key rate at 4.5%, in line with its intention to take a break to assess the impact of the rapid rise in interest rates on the economy.
In its statement, the central bank notes that “the latest data are still consistent with the Bank’s expectation that inflation measured by the consumer price index will decline to around 3% by mid-year”. .
This is the first time in a year that the key rate has not increased. The decision was widely expected by most economists, even though the central bank is receiving mixed signals on the state of the Canadian economy.
The labor market is showing no sign of weakness and the unemployment rate is at a historic low. On the other hand, growth measured by Gross Domestic Product has been slowing down for three quarters and was much lower than the central bank had forecast. Inflation as measured by the Consumer Price Index has slowed to 5.9%, after peaking at 8.1% in June 2022.