Bank of Canada Holds Rates On Renewed Inflation Concerns

The Canadian economy is booming and inflation remains lofty, according to the central bank. The Bank of Canada (BoC) held its key policy rate this morning, matching market expectations. The BoC defended its decision based on strong GDP growth and elevated inflation. However, the Governor warned that high energy prices and trade turmoil may trickle into input costs, suggesting the potential for higher rates if price growth doesn’t calm. Bank of Canada Holds Rates Due To High GDP Growth & Inflation The BoC held the overnight rate at 2.25%, where it’s been for just over ten months. The Bank Rate (2.5%) and deposit rate (2.2%) also remain unchanged, as widely expected. The central bank defended the decision on the basis that economic data and inflation are moving in line with expectations. “Since our last decision, inflation and growth in Canada have evolved broadly as forecast. Against that background, we decided to leave the policy rate unchanged,” explained BoC Governor Tiff Macklem, in his opening remarks. The Governor stressed the BoC’s Governing Council remains prepared to react to economic conditions as they evolve. He further emphasized their commitment to anchor price stab...