After much speculation and careful handwringing from Canadian homeowners, the Bank of Canada announced it is holding its key interest rate at 5 per cent – marking the third consecutive rate hold since its adjustment earlier in the year.
In its announcement today, the bank said that Canadian economic growth has continued to slow down, mostly thanks to its decision to hike interest rates. Now that borrowing and spending have slowed, inflationary pressures are easing.
After CPI inflation skyrocketed to 8.1 per cent in the summer of 2022, the bank claims that inflation dropped down to 3.1 per cent in October 2023.
While another rate hold is good news for homeowners and borrowers, the decision to maintain the current key rate doesn’t come without a healthy dose of caution – which could mean further hikes if inflation doesn’t slow fast enough.
“Governing Council is still concerned about risks to the outlook for inflation and remains prepared to raise the policy rate further if needed,” the bank said in a statement. “Governing Council wants to see further and sustained easing in core inflation and continues to focus on the balance between demand and supply in the economy, inflation expectations, wage growth and corporate pricing behaviour.”
“The Bank remains resolute in its commitment to restoring price stability for Canadians.”
For now, Canadians can breathe easy. The next scheduled date for announcing the overnight rate target is January 24, 2024.
