The Bank of Canada has decided to maintain its target for the overnight rate at 4.5%, with the Bank Rate at 4.75% and the deposit rate at 4.5%. The bank is also continuing its policy of quantitative tightening.

Inflation in many countries is easing, but measures of core inflation in advanced economies suggest persistent price pressures, especially for services. Global economic growth has been stronger than anticipated, but is expected to weaken as tighter monetary policy continues to feed through those economies.

In Canada, demand is still exceeding supply and the labour market remains tight. Economic growth in the first quarter looks to be stronger than projected in January, but consumption is expected to moderate this year.

CPI inflation is expected to fall quickly to around 3% in the middle of this year and then decline more gradually to the 2% target by the end of 2024. The Bank remains prepared to raise the policy rate further if needed to return inflation to the 2% target. 

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