In a widely expected move, the Bank of Canada on Wednesday announced that it has decided to leave interest rates unchanged.
The Bank of Canada held its target for the overnight rate at 5.0 percent, with the bank rate at 5.25 percent and the deposit rate at 5.0 percent.
The Canadian central bank attributed the decision to clearer signs that monetary policy is moderating spending and relieving price pressures.
However, the BoC said its Governing Council is concerned that progress towards price stability is slow and inflationary risks have increased and is prepared to raise the policy rate further if needed.
“Governing Council wants to see downward momentum in core inflation, and continues to be focused on the balance between demand and supply in the economy, inflation expectations, wage growth and corporate pricing behavior,” the BoC said.
The bank’s statement also noted the global economy is slowing and growth is forecast to moderate further as past increases in policy rates and the recent surge in global bond yields weigh on demand.
The BoC forecast global GDP growth of 2.9 percent this year, 2.3 percent in 2024 and 2.6 percent in 2025.
“While this global growth outlook is little changed from the July Monetary Policy Report (MPR), the composition has shifted, with the US economy proving stronger and economic activity in China weaker than expected,” the bank said.
With regard to inflation, the BoC said consumer price inflation is expected to average about 3.5 percent through the middle of next year before gradually easing to 2 percent in 2025.