Bank of Canada holds key Interest Rate at 5%

(March 06, 2024 )


Wednesday, March 6, 2024 

The Bank of Canada holds key interest rate at 5% for fifth straight decision  

The annual rate of inflation dropped half a percentage point in January to finish at 2.9%, but is still trending above 3% annually due to persistently high shelter inflation as well as food, health and personal care. 

The consensus from the Bank of Canada is that it's "too early" to cut interest rates and they need to give it more time to do its work to get back down to the mandated 2%, although signaling the benchmark rate might now be high enough.

"We've come a long way in our fight against high inflation. Monetary policy is working-inflation is coming down. But it's too early to loosen the restrictive policy that has gotten us this far," remarked Governor Tiff Macklem, Bank of Canada 

When are the interest rates expected to be cut? 

The Bank of Canada did not provide a clear timeline for when to expect any cuts, but urged Canadians to watch for the indicators , and to anticipate any future cuts won't be happening at the same pace as interest rates were raised.

The Bank of Canada expects that inflation will hover around 3% through the spring due to volatility with gas prices.

The next central bank decision will be on April 10th. With most economists still predicting a June/July interest rate cut, greater clarity from the Bank of Canada will be provided with fresh forecasts for inflation and economic growth, and hopefully, a timeline  on when we may see the rates drop.

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