The Bank of Canada announced on Wednesday that it would maintain its key rate at 5%, for the fifth time in a row and in line with analysts’ expectations, saying it was still “concerned” by the risks of inflationary pressures.
The board of directors wants to see core inflation continue to fall in a sustainable manner, the central bank said in a press release.
In January, the inflation rate fell to 2.9%, thus falling within the target range of 1 to 3% aimed by the central bank, a first since June 2023.
The institution, which expects inflation to remain around 3% in the first half of 2024 before gradually decreasing, says it is still closely monitoring the balance between supply and demand, inflation expectations , wage growth and corporate pricing practices.
The bank kept its key rate at 5% – the highest level in 22 years – in September, October, November and January in an effort to stabilize the economy and curb rampant inflation.
The expansion of the economy in the fourth quarter was higher than expected, but its pace remained weak and below its potential, notes the institution, noting a sharp increase in exports (which) stimulated growth.
But, she says, employment continues to grow more slowly than the population and the increase in housing costs remains high.
The next monetary policy announcement will take place on April 10.