Bank of Canada stops raising interest rates and maintains them at 4.5%
Following the 0.25% rate hike in January, the bank itself stated it hoped to cease its aggressive rate hike cycle in March, prompting the pause. However, industry experts have been speculating for some weeks that the bank will do just that.
Experts in the field have been speculating for a few weeks that the bank will stop its aggressive rate hike cycle in March, which is what the bank had stated it planned to do after the 0.25% hike in January.
According to the bank’s announcement, “At its January decision, the Governing Council indicated that it expected to hold the policy interest rate at its current level, subject to economic developments evolving largely in line with the MPR outlook.”
So far, the BoC policy rate has had some impact on inflation
The BoC’s halt will allow it some time to examine how the already-implemented hikes would affect inflation, specifically whether they’re adequate to rein inflation in closer to the bank’s aim of 2%. In recent months, inflation has taken numerous minor steps down, dropping to 5.9% in January.
Before the announcement, some experts predicted rate reductions for later in 2023. The results of the BoC’s Market Participants Survey, which was based on input from about 30 financial market participants, including senior economists and strategists from banks, pension funds, asset management organisations, and insurance companies, were just released last month. The anticipation that the BoC will lower interest rates by 25 basis points in both October and December, bringing the policy rate down to 4% by the end of the year, was the most common response among participants.
Predictions can only provide so much information, of course, and only time will tell if there will be another pause, rise, or cut.
On June 07, the Bank of Canada will make its next rate announcement.
