Bank of Canada holds key interest rate at 4.5%

Apr 12 2023, 2:09 pm

The Bank of Canada is holding its key interest rate at 4.5%.

In an update on Wednesday morning, the BoC stated, “Inflation in many countries is easing in the face of lower energy prices, normalizing global supply chains, and tighter monetary policy.”

“At the same time, labour markets remain tight and measures of core inflation in many advanced economies suggest persistent price pressures, especially for services,” it added.

The BoC’s Governing Council decided to maintain the policy rate as it continues to assess whether monetary policy is sufficiently restrictive to relieve price pressures and remains prepared to raise the policy rate further if needed to return inflation to the 2% target.

The Bank states it “remains resolute in its commitment to restoring price stability for Canadians.”

The next scheduled date for announcing the overnight rate target is June 7, 2023.

Canada’s central bank also provided a monetary policy report, showing inflation in Canada remains high but “should come down quickly to around 3% in the middle of this year because of lower energy prices, improved supply chains and restrictive monetary policy.”

The Bank projects that inflation will reach the 2% target by the end of 2024.

Throughout 2022, the bank hiked its interest rate seven times. Another increase followed in January of this year, bringing the key rate to 4.5%. Throughout its rate hike updates, the Bank of Canada has repeatedly cited inflation as the core reason for its decisions.

Experts had anticipated a rate hold was in store for March, marking the first slowdown after several major rate hikes.

Canadians continue to struggle financially

Even as the Bank of Canada holds the key interest rate steady, many Canadians are still worried about their finances.

A Consumer Debt Index from MNP suggests half of Canadians surveyed believe the worst part of the economic cycle is yet to come.

“Facing inflation as well as sharply higher interest rates on their outstanding debts, deeply indebted Canadians may be rightfully feeling that the worst is yet to come,” says Grant Bazian, president of MNP LTD., the country’s largest insolvency firm.

“There isn’t much financial wiggle-room in many household budgets, illustrating the toll of higher interest rates, especially for those who can least afford it.”

One-third of Canadians feel that the economic conditions over the last six months were worse than they expected.

Nearly half of Canadians report that they are $200 away or less from not being able to meet all of their financial obligations, including about one-third who say they already don’t make enough to cover their bills and debt payments.

National Trending StaffNational Trending Staff

+ News
+ Venture
+ Real Estate
+ Urbanized
+ Money
+ Canada
ADVERTISEMENT