Following consecutive rate hikes in June and July 2023, the Bank of Canada decided to maintain its target for the overnight lending rate at 5%.
We have maintained our policy interest rate at 5.00%.
— Bank of Canada (@bankofcanada) September 6, 2023
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On Wednesday, September 6, 2023, the Bank reiterated most of its core messaging from the previous announcement, citing a continuation of elevated inflation and a slowdown in economic growth. The Bank noted reduced consumption and housing activity, as well as wildfires across the country, as contributing to weaker economic activity.
According to the Bank, it expects near-term inflation to run higher again before easing due to a recent increase in gasoline prices and noted that core measures of inflation are currently running at about 3.5%, which is higher than the Bank’s preferred range of 1-3%.
The Bank remains concerned about inflation remaining higher for longer and becoming entrenched. Although the policy rate was held at 5%, it’s still prepared to hike rates further if necessary.
The Bank of Canada’s next scheduled interest rate announcement will be on Wednesday, October 25, 2023, at which time it will also publish an updated economic forecast in its next Monetary Policy Report.
