Central bank announces highly anticipated call
The Bank of Canada has held interest rates in place for a sixth consecutive time, leaving its policy rate unchanged even as speculation continues to grow around a timeline for its first cut.
The central bank said this morning that it was keeping its benchmark interest rate, which leads variable mortgage rates in Canada, at its current level of 5.0% as it continues to weigh up the inflation outlook and whether the economy is slowing at a desired pace.
Few had expected the Bank to announce a rate cut as early as today, although expectations are hardening around a likely rate drop in the summer – possibly in June, when its next decision on rates is due.
Policymakers have held the trendsetting interest rate at a 23-year high in recent months to keep inflation in check, although the consumer price index (CPI) fell to 2.8% in February, a reading that put it within the central bank’s target range.
Canada’s economy expanded at its fastest rate for a year in January, with GDP growth (gross domestic product) ticking up to 0.6% in a development that all but torpedoed the prospect of an April rate cut.
Still, the national jobless rate jumped to 6.1% in March, the largest month-over-month increase in the unemployment rate since mid-2022, as the economy shed 2,200 jobs.
The Bank embarked on an aggressive rate-hiking path at the beginning of 2022 to combat surging inflation – but it has not increased rates since July 2023, with much debate set to arise in the coming weeks over whether its first cut will arrive in June or July.
