Bank of Canada maintains rate at 5%

The Bank of Canada has maintained its target for the overnight rate at 5%, adhering to a policy of quantitative tightening. 

Amid a global economic slowdown and decreasing inflation, the United States experiences stronger-than-expected growth, primarily driven by robust consumer spending. However, the US economy is expected to weaken in the coming months due to past policy rate increases. 

The euro area sees weakened growth, accompanied by lower energy prices, alleviating inflationary pressures. In Canada, economic growth stagnated in 2023, with GDP contracting by 1.1% in the third quarter. Higher interest rates are curbing spending, impacting consumption and business investment. 

Despite an easing labour market, wages continue to rise by 4-5%. Inflation in Canada has moderated to 3.1%, with shelter prices increasing, but the Bank’s preferred measures of core inflation hover around 3½-4%.

The Bank of Canada remains watchful, expressing concern about inflation risks, and is prepared to raise the policy rate further if necessary, emphasizing the importance of restoring price stability.

Read the future news release at https://www.bankofcanada.ca/2023/12/fad-press-release-2023-12-06/ 

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