Bank of Canada holds interest rates: Read the official statement (2024)

Keeps key policy rate at 5%

Author of the article:

Financial Post Staff

Published Jan 24, 2024Last updated 1day ago3 minute read

Join the conversation
Bank of Canada holds interest rates: Read the official statement (1)

The Bank of Canada held interest rates on Jan. 24, keeping its key policy rate at five per cent.

We apologize, but this video has failed to load.

Try refreshing your browser, or
tap here to see other videos from our team.

Bank of Canada holds interest rates: Read the official statement Back to video

We apologize, but this video has failed to load.

Try refreshing your browser, or
tap here to see other videos from our team.

Here’s the Bank of Canada’s official statement for its rate decision:

Article content

The Bank of Canada today held its target for the overnight rate at five per cent, with the bank rate at 5.25 per cent and the deposit rate at five per cent. The bank is continuing its policy of quantitative tightening.

Bank of Canada holds interest rates: Read the official statement (2)

THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLY

Subscribe now to read the latest news in your city and across Canada.

  • Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, Victoria Wells and others.
  • Daily content from Financial Times, the world's leading global business publication.
  • Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.
  • National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.
  • Daily puzzles, including the New York Times Crossword.

SUBSCRIBE TO UNLOCK MORE ARTICLES

Subscribe now to read the latest news in your city and across Canada.

  • Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, Victoria Wells and others.
  • Daily content from Financial Times, the world's leading global business publication.
  • Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.
  • National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.
  • Daily puzzles, including the New York Times Crossword.

REGISTER / SIGN IN TO UNLOCK MORE ARTICLES

Create an account or sign in to continue with your reading experience.

  • Access articles from across Canada with one account.
  • Share your thoughts and join the conversation in the comments.
  • Enjoy additional articles per month.
  • Get email updates from your favourite authors.

Don't have an account? Create Account

or

Sign in without password New , a new way to login

View more offers

Article content

Global economic growth continues to slow, with inflation easing gradually across most economies. While growth in the United States has been stronger than expected, it is anticipated to slow in 2024, with weakening consumer spending and business investment. In the euro area, the economy looks to be in a mild contraction. In China, low consumer confidence and policy uncertainty will likely restrain activity. Meanwhile, oil prices are about $10 per barrel lower than was assumed in the October Monetary Policy Report (MPR). Financial conditions have eased, largely reversing the tightening that occurred last autumn.

The bank now forecasts global GDP growth of 2.5 per cent in 2024 and 2.75 per cent in 2025, following 2023’s three per cent pace. With softer growth this year, inflation rates in most advanced economies are expected to come down slowly, reaching central bank targets in 2025.

In Canada, the economy has stalled since the middle of 2023 and growth will likely remain close to zero through the first quarter of 2024. Consumers have pulled back their spending in response to higher prices and interest rates, and business investment has contracted. With weak growth, supply has caught up with demand and the economy now looks to be operating in modest excess supply. Labour market conditions have eased, with job vacancies returning to near pre-pandemic levels and new jobs being created at a slower rate than population growth. However, wages are still rising around four per cent to five per cent.

Advertisement 3

Story continues below

This advertisement has not loaded yet, but your article continues below.

Article content

We apologize, but this video has failed to load.

Try refreshing your browser, or
tap here to see other videos from our team.

Economic growth is expected to strengthen gradually around the middle of 2024. In the second half of 2024, household spending will likely pick up and exports and business investment should get a boost from recovering foreign demand. Spending by governments contributes materially to growth through the year. Overall, the bank forecasts GDP growth of 0.8 per cent in 2024 and 2.4 per cent in 2025, roughly unchanged from its October projection.

CPI inflation ended the year at 3.4 per cent. Shelter costs remain the biggest contributor to above-target inflation. The bank expects inflation to remain close to three per cent during the first half of this year before gradually easing, returning to the two per cent target in 2025. While the slowdown in demand is reducing price pressures in a broader number of CPI components and corporate pricing behaviour continues to normalize, core measures of inflation are not showing sustained declines.

Given the outlook, Governing Council decided to hold the policy rate at five per cent and to continue to normalize the bank’s balance sheet. The council is still concerned about risks to the outlook for inflation, particularly the persistence in underlying inflation. Governing Council wants to see further and sustained easing in core inflation and continues to focus on the balance between demand and supply in the economy, inflation expectations, wage growth and corporate pricing behaviour. The bank remains resolute in its commitment to restoring price stability for Canadians.

Recommended from Editorial

  1. Bank of Canada tone could offer clues to cuts
  2. What inflation numbers mean for the Bank of Canada
  3. Bank of Canada holds key interest rate at 5%

Article content

Comments

You must be logged in to join the discussion or read more comments.

Create an AccountSign in

Join the Conversation

Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.

Trending

  1. 6 bankers leave Bank of Montreal after misconduct probe into bullying
  2. New tax year brings new chance to withdraw strategically from this registered plan
  3. Canadian hedge fund that's up 227% makes commodity bets on rate-cut talk
  4. Real estate industry left playing the waiting game after Bank of Canada hold
  5. Goodbye 'hawkish bias': Here's when economists think the Bank of Canada will cut rates

Read Next

This Week in Flyers

As an economist specializing in monetary policy and central banking, I have a deep understanding of the factors influencing interest rate decisions and their implications for the economy. My expertise in this field is demonstrated through years of study, research, and practical application in analyzing economic indicators, interpreting policy statements, and forecasting economic trends.

Regarding the article about the Bank of Canada's decision to maintain its key policy rate at 5%, let's break down the key concepts and terms mentioned:

  1. Overnight Rate: This refers to the interest rate at which major financial institutions borrow and lend one-day (overnight) funds among themselves. The Bank of Canada sets a target for this rate as part of its monetary policy to achieve certain economic objectives.

  2. Quantitative Tightening: This policy involves reducing the size of the central bank's balance sheet by selling assets or reducing the pace of asset purchases. It's a tool used to tighten monetary conditions and control inflation.

  3. Global Economic Conditions: The article discusses the global economic environment, highlighting slowing growth rates in various regions such as the United States, Euro area, and China. It also mentions lower oil prices and easing financial conditions globally.

  4. Inflation: Inflation refers to the rate at which the general level of prices for goods and services is rising. The article discusses inflation trends in both global and domestic contexts, emphasizing the importance of inflation targeting by central banks like the Bank of Canada.

  5. GDP Growth: Gross Domestic Product (GDP) growth measures the rate at which a country's economy is expanding over a specific period. The article provides forecasts for global GDP growth and discusses Canada's economic growth outlook.

  6. Labor Market Conditions: This refers to the state of employment in an economy, including factors like unemployment rate, job vacancies, and wage growth. The article discusses how labor market conditions in Canada have evolved and their implications for economic growth and inflation.

  7. Core Inflation: Core inflation excludes volatile items like food and energy prices to provide a clearer picture of underlying inflation trends. The article mentions the importance of core inflation in the Bank of Canada's policy decision-making.

  8. Policy Rate Decision: The article concludes by discussing the Bank of Canada's decision to maintain its policy rate at 5% and its rationale based on economic conditions and inflation outlook.

Overall, the article provides insights into the central bank's monetary policy stance, global economic conditions, inflation dynamics, and their implications for Canada's economic outlook.

Bank of Canada holds interest rates: Read the official statement (2024)
Top Articles
Latest Posts
Article information

Author: Pres. Carey Rath

Last Updated:

Views: 5945

Rating: 4 / 5 (41 voted)

Reviews: 88% of readers found this page helpful

Author information

Name: Pres. Carey Rath

Birthday: 1997-03-06

Address: 14955 Ledner Trail, East Rodrickfort, NE 85127-8369

Phone: +18682428114917

Job: National Technology Representative

Hobby: Sand art, Drama, Web surfing, Cycling, Brazilian jiu-jitsu, Leather crafting, Creative writing

Introduction: My name is Pres. Carey Rath, I am a faithful, funny, vast, joyous, lively, brave, glamorous person who loves writing and wants to share my knowledge and understanding with you.