After its January policy meeting, the Bank of Canada (BoC) stated on Wednesday that it has increased its benchmark interest rate by 25 basis points to 4.5%. This choice was consistent with what the market anticipated.
The BoC stated in its policy statement that it is likely to keep the rate at current level while evaluating the effects of successive rate rises.
“We anticipate that global growth will decelerate to 1.9% in 2023 from 3.6% in 2022 and to 2.0% in 2022 in the US.”
The output gap decreased from an upwardly revised 0.75% to 1.75% in Q3 to between 0.50% and 1.50% in Q4.
Measures of core inflation over the past three months have decreased, indicating a peak in core inflation.
“Ready to continue the quantitative tightening program prepared to boost policy rate further if necessary to bring inflation back to 2% objective.”
“A rising body of research shows that restrictive economic policies are lowering activity, particularly household expenditure.”
“Financial circumstances are still tight but have loosened since October; the Canadian dollar has remained fairly steady against the US dollar.”
“Global inflation is still quite strong and widespread.”
