Bank of Canada keeps interest rate on hold amid global economic slowdown
Canada is on course for an economic recovery.
While the global economic landscape is undergoing a marked change, the Bank of Canada today announced its decision to hold its key rate at 5%.
World context
Economic growth is slowing around the world. In the US, although ahead of forecasts, it is already starting to slow down due to an expected decline in consumer spending and business investment.
The Eurozone is shrinking in size, and in China low consumer confidence and political uncertainty threaten to become a stumbling block to economic activity.
Oil prices were below forecasts, which is important for export-oriented economies.
Inflation and wages in Canada
In this regard, the situation in Canada reflects broader trends — the economy has slowed since mid-2023, and growth prospects are close to zero until at least the first quarter of next year. Consumers are cutting back on spending and business investment has fallen, suggesting that demand has finally caught up with supply. In the labor market, despite some recovery, wage growth still remains at 4-5%.
The Bank of Canada expects the economy to regain momentum by mid-2024 and is counting on increased household spending. Government spending should also contribute to economic growth. As a result, Canada's GDP could show growth of 0.8% in 2024 and 2.4% in 2025.
Inflation, as measured by the consumer price index, ended the previous year at 3.4% — driven by housing costs. The Bank forecasts that it will reach a level of 3% in the first half of 2024, but then decline smoothly to a target of 2% by 2025.
Is the country's economy doing well?
The Bank of Canada remains alert to risks to the inflation outlook, in particular core inflation. The Governing Council will continue to closely monitor the supply-demand balance, inflation expectations, wage growth and corporate pricing strategies.
This weekend Canada switches to winter time
A new era for Canadian athletes
Canada celebrates its National Day and reflec...
Rising inflation in May threatens rate cuts i...
Canada Prepares for a Sharp Increase in the E...
High Auto Insurance Rates for Immigrants Spar...
Canadian intelligence raises alarm: China's i...
Canada continues to attract skilled professio...
How the food supply chain in Canada works and...
The mysterious disappearance of a taxidermy g...
The remains of a mysterious ship have been fo...
Saskatchewan raises age limit for tobacco pur...
Those in charge reaffirmed their determination to bring price stability back to Canadians and promised to carefully analyze economic indicators ahead of the next rate meeting scheduled for March 6, 2024. A full report on the economy and inflation, including a risk analysis, is expected on April 10, 2024.
