Economists had expected the Bank of Canada to keep its benchmark interest rate the same on Wednesday.
After a year of rapid rate increases to control inflation, the Fed has decided to keep its key policy rate at 4.5% at its second meeting in a row.
In January, the Bank of Canada stated that as long as inflation continued to fall in line with its forecast, it would adopt a pause in rate increases.
However, in a statement, the central bank stated that it would still be willing to raise interest rates “if necessary” to bring inflation back to the 2% target.
The Bank of Canada predicted that inflation would fall to around 3% by the middle of this year in a separate monetary policy report that was released in conjunction with the decision to raise the interest rate on Wednesday.
The national bank additionally said expansion is currently expected to ease back to two percent toward the finish of 2024 — it had recently said it would hit this target at some point one year from now.
In February, the annual rate of inflation was 5.2%, down from 8.1% in the summer. This indicates that inflation has slowed down recently.
Despite signs of a persistent economy and a tight labor market thus far in 2023, the majority of economists had anticipated the rate to remain unchanged, increasing the likelihood that inflation would continue to rise.
Other central banks around the world, on the other hand, have been more cautious about their rate paths and the possibility of sending global economies into recession due to concerns raised by the recent banking turmoil in the United States and Europe.
