Bank of Canada Holds Interest Rate Steady at 4.5%

The Bank of Canada has announced it will hold its target for the overnight rate at 4.5%, with the Bank Rate at 4.75% and the deposit rate at 4.5%, while continuing its policy of quantitative tightening.

The central bank says the global economic developments have broadly evolved in line with the January Monetary Policy Report, with global growth slowing and inflation coming down primarily due to lower energy prices.

Canadian economic growth was flat in Q4 2022, lower than the Bank projected, due to a significant slowdown in inventory investment.

Bank of Canada says restrictive monetary policy continues to weigh on household spending, and business investment has weakened alongside slowing domestic and foreign demand. Inflation eased to 5.9% in January due to lower price increases for energy, durable goods, and some services.

The Bank expects CPI inflation to come down to around 3% in the middle of this year, with the goal of returning inflation to the 2% target. The Bank of Canada says they are committed to restoring price stability for Canadians.

The next interest rate decision is on Wednesday, April 12.