File Photo (Image Credit: The Canadian Press)

By Spencer Mielke

Interest Rates

Bank of Canada holds key interest rate at 4.5 per cent

Apr 12, 2023 | 2:07 PM

OTTAWA — The Bank of Canada held its key policy rate at 4.5 per cent on Wednesday (April 12) — as it continues its efforts to bring inflation back down.

In a statement released Wednesday, Governor Tiff Macklem said the target is to bring the rate to 3 per cent by the middle of the year, and see inflation drop to 2 per cent by 2024.

June 2022 saw the current inflation spike hit a high of 8 per cent while the key interest rate at the time was at 1 per cent. In an effort to impact inflation over the past year, the policy rate has risen all the way up to the current rate of 4.5 per cent. The most recent measurement of the inflation rate was recorded at 5.2 per cent back in February.

“Getting inflation the rest of the way back to 2 per cent could prove to be more difficult because inflation expectations are coming down slowly, service price inflation and wage growth remain elevated, and corporate pricing behaviour has yet to normalize,” said Macklem in the statement.

The Bank’s Monetary Policy Report (MPR) projects global growth of 2.6 per cent this year, 2.1 per cent in 2024, and 2.8 per cent in 2025.

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Statistics Canada reported 205,000 new jobs were created in the first three months of the year, however the unemployment rate remained unchanged.

The B.C unemployment rate lowered from 5.1 per cent in February to the current rate at 4.5 per cent, which is 0.5 per cent lower than the national rate.

To conclude, the report states, “Recent data is reinforcing the Governing Council’s confidence that inflation will continue to decline in the next few months.”