Last Update: September 6, 2023
Bank of Canada Keeps Overnight Rate Unchanged at 5%
The Bank of Canada kept its benchmark interest rate unchanged at 5% on Wednesday, as expected by economists. The central bank said that it is “concerned about the persistence of underlying inflationary pressures,” but that it believes that recent evidence of easing excess demand in the economy warrants a hold in the policy rate.
The Bank of Canada also said that it is continuing its policy of quantitative tightening, which involves selling government bonds and other assets to reduce the amount of money in circulation. The central bank said that it will continue to assess the dynamics of core inflation and the outlook for CPI inflation before making any further decisions on monetary policy.
more to fight inflation. Only time will tell what the long-term impact of this decision will be.
The decision to keep the overnight rate unchanged was a relief to some economists, who had been concerned that the Bank of Canada might raise rates again in an effort to bring inflation under control. However, other economists said that the Bank of Canada is walking a fine line between slowing inflation and causing a recession.
The Bank of Canada’s decision to keep the overnight rate unchanged is likely to have a mixed impact on the Canadian economy. On the one hand, it will help to keep mortgage rates low, which will support housing demand. On the other hand, it will make it more expensive for businesses to borrow money, which could slow investment and economic growth.
The Bank of Canada will next meet to set monetary policy on October 25, 2023.
Here are some additional details about the Bank of Canada’s decision to keep the overnight rate unchanged:
- The Bank of Canada said that inflation is still above its target of 2%, but that it is starting to come down. Core inflation, which excludes food and energy prices, was 4.7% in July.
- The Bank of Canada said that the Canadian economy is slowing, but that it is still growing. GDP growth was 3.1% in the second quarter of 2023.
- The Bank of Canada said that it is prepared to raise interest rates again if needed to bring inflation under control. However, it said that it will also consider other factors, such as the strength of the economy, when making its decisions.
The Bank of Canada’s decision to keep the overnight rate unchanged is likely to be met with mixed reactions from Canadians. Some people will be relieved that interest rates are not going up, while others will be disappointed that the central bank is not doing