Bank forecasts inflation will be 3% by mid-2023 and return to 2% next year
The Bank of Canada decided to hold its interest rate steady at 4.5 per cent on Wednesday while the impact of its previous rate hikes filters down through the economy.
The bank’s move was widely anticipated by economists, because the bank had telegraphed its intention to hit pause on rate hikes after raising them eight times between March 2022 and February of this year.
After slashing its benchmark lending rate in the early days of the pandemic to keep the economy going, the bank began an aggressive campaign of rate hikes in early 2022 once inflation soared to its highest level in decades.
Canada’s inflation rate peaked at more than eight per cent in June 2022, and as of February 2023 had cooled to just over five per cent. Data for March is set to be released next week and it’s expected to show the rate has cooled to as low as four per cent.