(Finance) – The Bank of Canada has overnight rate kept at 5%, with the bank rate at 5.25% and the deposit rate at 5%. The Canadian central bank, which met analysts’ expectations, added that it is continuing quantitative tightening.
In Canada, “there are There is growing evidence that past interest rate increases are dampening economic activity and easing price pressures”, reads the note released at the end of today’s meeting. Consumption was contained, with weaker demand for housing, durable goods and many services. Weaker demand and higher financial costs weigh on on business investments.
L’CPI inflation has been volatile in the last months: 2.8% in June, 4.0% in August and 3.8% in September. “Higher interest rates are moderating inflation in many goods that people buy on credit, and this is spreading to services,” it explains. “Food inflation is easing from very high rates.”
Ultimately, “with clearer signs that monetary policy is moderating spending and easing price pressures, the Governing Council decided to maintain the key rate at 5% and continue to normalize the bank’s balance sheet. However, the Board of directors fears that progress towards price stability is slow and that inflationary risks have increased and is ready to further increase the policy rate if necessary.”
(Photo: sebastiaan stam on Unsplash)