The Bank of Canada, as widely expected by financial experts, is holding the line on interest rates. The overnight rate will remain at five per cent, at least until the Bank's next scheduled announcement on March 6. In doing so, the Bank said that “global economic growth continues to slow, with inflation easing gradually across most economies.”
In Canada, it expects the flat economy to remain close to zero until April, explaining in a press release:
“Consumers have pulled back their spending in response to higher prices and interest rates, and business investment has contracted. With weak growth, supply has caught up with demand and the economy now looks to be operating in modest excess supply. Labour market conditions have eased, with job vacancies returning to near pre-pandemic levels and new jobs being created at a slower rate than population growth.”
The Bank expects the economy to strengthen gradually through the end of 2024, and inflation to return to its target of two per cent next year. Its Governing Council “is still concerned about risks to the outlook for inflation, particularly the persistence in underlying inflation.”
Following the next March 6 interest-rate report, the Bank will publish its next full outlook for the economy and inflation on April 10.