Bank of Canada Maintains Interest Rates Amid Inflation Uncertainty. On Wednesday, the Bank of Canada opted to maintain its benchmark interest rate at 5% for the sixth consecutive time. The decision stems from the bank’s stance that it must be confident in the sustainability of the downward trend in inflation before considering any rate reductions.
The central bank noted a slowdown in price growth across most major sectors and anticipates inflation to hover around 3% in the near term, with a projected dip below 2.5% in the latter part of the year. Canada’s central bank has the mandate to achieve and uphold 2% inflation, a target it aims to reach by 2025. Recent data indicates a consecutive two-month deceleration in inflation, now standing at 2.8%, which is at the upper boundary of the central bank’s target range of 1% to 3%.
The decision by the central bank suggests a gradual inclination towards potential rate cuts while maintaining a cautious approach. The upcoming release of two sets of monthly inflation data by Statistics Canada, with the first due next week, will precede the central bank’s next rate-policy determination on June 5.
According to a survey conducted by The Wall Street Journal last week, all 12 economists predicted that the Bank of Canada would maintain its target for the overnight rate. However, nine of those economists expressed anticipation for a rate cut at the central bank’s decision on June 5. Bank of Canada Maintains Interest Rates
