No change on BoC overnight rate, continues quantitative tightening

The Bank of Canada today held its target for the overnight rate at 5%, with the Bank Rate at 5¼% and the deposit rate at 5%. The Bank is continuing its policy of quantitative tightening.

The economy is expected to pick up around mid-2024, with more spending, exports, and business investments. The central bank predicts GDP growth of 0.8% in 2024 and 2.4% in 2025. Inflation is at 3.4%, mainly due to high shelter costs. It’s expected to stay around 3% for the first half of the year before easing to 2% in 2025. Despite some price easing, core inflation isn’t dropping much. The bank is keeping the policy rate at 5% and normalizing its balance sheet, concerned about inflation risks. They want to see sustained easing in core inflation to restore price stability for Canadians.