2023-10-25 15:57:37
The Bank of Canada has decided to maintain its key rate at 5% for a second consecutive time in order to continue its efforts in the fight once morest inflation. Meanwhile, economic stagnation is expected to last longer than expected.
• Read also: This is how the key rate affects your life
«We left the rate at the same level because monetary policy is slowing the economy and easing price pressures, and we want to give it time to do its job,” explained the governor of the Bank of Canada (BoC), Tiff Macklem, at a press conference Wednesday morning.
Globally, the economy is slowing and inflation is falling “in most economies,” the BoC noted in a statement.
Canada is not spared from the slowdown. With demand being dampened by past rate hikes by central banks and the recent sharp rise in global bond yields.
As a result, the institution has revised downward its growth expectations in the country. “GDP growth is expected to remain below 1% for several quarters to come, before rising towards the end of 2024 and rising above 2.5% in 2025,” said Mr. Macklem.
In terms of the labor market, the situation still remains “rather tense”, despite the “strong shortages of workers” which have reportedly “reduced significantly”.
“The number of job vacancies has fallen, but remains higher than normal, and, despite a slight increase, the unemployment rate remains low,” the governor said.
“Wage growth remains strong and is between 4 and 5%,” he stressed.
The BoC indicated that “central banks remain vigilant” and that the war in Israel and Gaza “represents a new source of geopolitical uncertainty”.
Even though it decided to maintain its key rate at 5% for a second consecutive time, the Bank of Canada nevertheless said it was “concerned by the slow progress towards price stability and by the increase in inflationary risks.”
Tiff Macklem said he was ready to increase the key rate once more “if necessary”.
Remember that on June 7, the Bank of Canada increased its key rate by a quarter of a percentage point following having maintained it at 4.5% three times since January 25, 2023. The key rate then increased by 0.25% in July to stand at 5%.
The next update will be on December 6, 2023.
1698257617
#Bank #Canada #opts #pause #key #rate
