(Canadian Press)

By CKOM News Staff

Bank of Canada holds key interest rate at 4.5 per cent

Mar 8, 2023 | 10:31 AM

The Bank of Canada held its key interest rate steady at 4.5 per cent Wednesday.

The decision to maintain the rate followed eight consecutive rate hikes. At the start of the year, the bank announced its intention to pause the increases to evaluate the impacts on Canada’s economy.

Canada’s annual inflation rate has slowed from 8.1 per cent down to 5.9 per cent in January. That rate is expected to fall to about three per cent by the middle of 2023, the bank said in a statement.

Economic growth fell flat in the fourth quarter of 2022, the Bank of Canada said, and was lower than the bank’s projections.

“With consumption, government spending and net exports all increasing, the weaker-than-expected GDP was largely because of a sizeable slowdown in inventory investment,” the central bank said in a statement.

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“Restrictive monetary policy continues to weigh on household spending, and business investment has weakened alongside slowing domestic and foreign demand.”

While the interest rate was unchanged for the first time in a year, the bank did leave open the possibility of further hikes if the economy or inflation run hotter than projected.

“Governing Council will continue to assess economic developments and the impact of past interest rate increases, and is prepared to increase the policy rate further if needed to return inflation to the two per cent target,” the bank noted.

“The Bank remains resolute in its commitment to restoring price stability for Canadians.”

The next announcement regarding the overnight rate target is expected on April 12.

— With files from The Canadian Press