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10.04.2024

BoC maintains its benchmark interest rate at 5.00%, as widely expected

The Bank of Canada (BoC) maintained its benchmark interest rates at 5.00 per cent on Wednesday, as widely expected. It was the Bank's sixth straight meeting on hold. The Canadian central bank also repeated it is continuing its policy of quantitative tightening.

In its policy statement, the Canadian central bank noted:

- Canada’s economic growth stalled in the second half of last year and the economy moved into excess supply;

- A broad range of indicators suggest that labour market conditions continue to ease;

- There are some recent signs that wage pressures are moderating;

- Domestic economic growth is forecast to pick up in 2024;

- BoC forecasts GDP growth of 1.5% in 2024, 2.2% in 2025, and 1.9% in 2026;

- BoC expects CPI inflation to be close to 3% during the first half of this year, move below 2.5% in the second half, and reach the 2% inflation target in 2025;

- Based on the outlook, Governing Council decided to hold the policy rate at 5% and to continue to normalize the Bank’s balance sheet;

- While inflation is still too high and risks remain, CPI and core inflation have eased further in recent months. Governing Council will be looking for evidence that this downward momentum is sustained;

- Governing Council is particularly watching the evolution of core inflation, and continues to focus on the balance between demand and supply in the economy, inflation expectations, wage growth, and corporate pricing behaviour

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