The Bank of Canada held its benchmark interest rate steady at 5.0 per cent on Wednesday and hinted that its tightening cycle might have peaked.
The decision, which marks the fourth consecutive hold from the central bank, was widely expected by economists. The Bank of Canada has been raising the cost of borrowing since March 2022 in an effort to tamp down inflation, which has declined sharply from highs of 8.1 per cent.
The hold came despite an uptick in annual inflation to 3.4 per cent in December. But economists have pointed to slowing elsewhere in the economy as likely to tame price pressures.
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While the Bank of Canada said in a statement accompanying the rate decision that it remains concerned about risks to the inflation outlook, the central bank removed language in previous announcements that said it “remains prepared to raise the policy rate further if needed.”
Heading into Wednesday’s decision, market watchers had started to forecast a timeline for rate cuts, with calls for easing to start between spring and summer of 2024.
More to come.
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