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Bank of Canada holds interest rates at 5 per cent

Jocelyn Aspa Jocelyn Aspa, The Market Online
0 Comments| December 6, 2023

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  • The Bank of Canada revealed it has chosen to keep interest rates unchanged at 5 per cent after its latest policy meeting
  • The bank last hiked the rates in July to its current levels, which remains the highest since 2001
  • Economic growth in Canada has slowed down through the middle part of 2023
  • It is expected the Bank of Canada will announce its next rate target by Jan. 24, 2024

The Bank of Canada (BoC) announced Wednesday that its much-anticipated interest rates will remain unchanged at 5 per cent.

In a news release, the central bank stated that higher rates seem to be bringing inflation down, but that economic growth has slowed through the middle part of the year.

“Higher interest rates are clearly restraining spending: consumption growth in the last two quarters was close to zero, and business investment has been volatile but essentially flat over the past year,” the bank stated in its decision on Wednesday.

In addition to the slowdown in the economy and a drop in gasoline prices, the bank stated this also led to an ease of CPI inflation to 3.1 per cent in October. Shelter price inflation picked up, however, indicating growth in rent and other housing costs along with elevated mortgage interest costs.

Interest rates were last increased in July to their current levels of 5 per cent – the highest since 2001.

Since March 2022, the Bank of Canada has hiked its interest rates 10 times in its efforts to lower the inflation of consumer prices that have peaked at just over 8 per cent.

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