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%.
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