Bank of Canada maintains policy rate, continues quantitative tightening March 8, 2023.
Following 8 previous and consecutive increases by the Bank of Canada (BoC) of the overnight lending rate, the BoC opted to keep the benchmark rate at 4.25% today, March 8, 2023 thus pausing any rate increase.
The BoC will continue its policy of quantitative tightening i.e. removing money supply from the Canadian economy in its continued battle to fight inflation.
Inflation continues to decline and CPI inflation is now at 5.90% reflecting lower price increases for energy, durable goods and some services.
Price increases for food and shelter remain high, causing continued hardship for Canadians.
Economic growth came in flat in the fourth quarter of 2022, lower than the BoC had projected.
Positive: Weak economic growth for the next couple of quarters should moderate wage growth and increase competitive pressures, making it more difficult for businesses to pass on higher costs to consumers resulting in lower inflation.The BoC still expects that CPI inflation will come down to around 3% in the middle of 2023. Caution: In the meantime, labour markets remain tight and the impact of Russia’s war in Ukraine remain key sources of upside risk for inflation. Hopefully, rates are starting to stabilize but the BoC remains resolute to increase the policy rate further if needed to return inflation to the 2% target.
The next scheduled date for announcing the overnight rate target is April 12, 2023.
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