The Bank of Canada has maintained its target for the overnight rate at 5% today, with the Bank Rate at 5.25% and the deposit rate at 5%. Here are the key highlights from the announcement:
Global Economic Trends:
‣ Inflation in advanced economies is on the decline, but core inflation remains elevated.
‣ Global growth slowed in Q2 2023, largely due to a significant slowdown in China.
‣ The U.S. saw stronger-than-expected growth driven by robust consumer spending.
‣ Europe's service sector supported growth while manufacturing contracted.
‣ Global bond yields have risen, reflecting higher real interest rates, and oil prices are higher than expected.
Canadian Economic Update:
‣ The Canadian economy is experiencing weaker growth to alleviate price pressures.
‣ Economic growth contracted by 0.2% at an annualized rate in Q2 2023, impacted by factors like wildfires.
‣ Household credit growth slowed due to higher rates, while government spending and business investment supported domestic demand.
‣ The labor market is gradually easing, with wage growth around 4% to 5%.
Inflation:
‣ Inflation remains a concern, with CPI inflation averaging close to 3%.
‣ Core inflation is running at about 3.5%, indicating little recent downward momentum.
‣ Recent gasoline price increases are expected to push CPI inflation higher in the near term.
Monetary Policy:
‣ The policy interest rate remains at 5%.
‣ The Bank continues to normalize its balance sheet.
‣ The Bank is watchful of underlying inflationary pressures and is ready to increase rates if needed.
‣ Assessment factors include excess demand, inflation expectations, wage growth, and corporate pricing behaviour.
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September 2023 | BOC Rate Announcement
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BoC Rate Announcement
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