The Bank of Canada held its benchmark interest rate at 5 per cent, a move widely expected by economists even as progress is made on inflation. The Bank of Canada held its benchmark interest rate at 5 per cent, a move widely expected by economists even as the central bank makes progress on tamping down inflation.
"It’s still too early to consider lowering the policy interest rate," Bank of Canada Governor Tiff Macklem said in his prepared opening statement. While progress has been made on slowing inflation, the central bank flagged in a statement released alongside its decision that "underlying inflationary pressures persist," highlighting that measures of core inflation are still in the 3 to 3.5 per cent range, and that the share of components in the Consumer Price Index that are growing above 3 per cent declined, but remains above the historical average.
"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.""For now, the overall message is that its too early to cut, and that they need to see more progress on inflation," CIBC chief economist Avery Shenfeld said in a research note shortly after the decision was released.
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