On April 12, 2023, the Bank of Canada announced that it would maintain its key interest rate. The overnight target rate remains at 4.5%, keeping the prime lending rate at 6.7%. This is the Bank’s second rate hold this year.
The Bank said it “continues to assess whether monetary policy is sufficiently restrictive to relieve price pressures and remains prepared to raise the policy rate further if needed to return inflation to the 2% target.”
Many factors contributed to this decision, including inflation, labour markets, economic growth, and so much more.
In the latest Monetary Policy Report, the Bank of Canada expects CPI inflation to fall from 5.2% to around 3% by mid 2023 and to the Bank’s 2% target by the end of 2024.
- The Bank of Canada warned that it “remains prepared to raise the policy rate further if needed to return inflation to the 2% target.”
- The Bank of Canada also advised Canadians, “Don’t plan on inflation staying high.”
- “The Bank expects CPI inflation to fall quickly to around 3% in the middle of this year and then decline more gradually to the 2% target by the end of 2024.”
- Rate cuts this year “do not look like the most likely scenario to us,” Macklem, Governor of the Bank of Canada, said.
The next announcement will take place on June 7, 2023. For complete details about the April 12, 2023, Bank of Canada announcement, click here>>
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