Bank of Canada not ready to lower interest rate yet

The Bank of Canada did as expected this morning and held steady on its overnight interest rate.

“Economic growth has remained weak, and inflation has eased further as higher interest rates restrain demand and relieve price pressures,” Bank of Canada Governor Tiff Macklem said at the morning media conference. “But with inflation still close to 3% and underlying inflationary pressures persisting, the assessment of Governing Council is that we need to give higher rates more time to do their work.
With that in mind, Governing Council decided to maintain the policy interest rate at 5%. We are also continuing our policy of quantitative tightening.”

The Bank cited its reasons for holding its rate as slow economic growth around the world, including in the United States, the increasing cost of oil, and inflation remaining higher than the target range of 2%.

“Governing Council wants to see further and sustained easing in core inflation and continues to focus on the balance between demand and supply in the economy, inflation expectations, wage growth, and corporate pricing behaviour,” the Bank’s statement said.

The Bank’s next scheduled interest rate announcement is April 10.