Official Statement
The Bank of Canada has held its key policy rate at five percent, with the bank rate at 5.25 percent and the deposit rate at five percent. The bank is continuing its policy of quantitative tightening.
Global Economic Outlook
The global economy is slowing down, and growth is expected to moderate further as past increases in policy rates and the recent surge in global bond yields weigh on demand. The bank projects global GDP growth of 2.9 percent this year, 2.5 percent in 2024, and 3.0 percent in 2025.
Canadian Economic Outlook
After averaging one percent over the past year, economic growth is expected to continue to be weak for the next year before increasing in late 2024 and through 2025. The near-term weakness in growth reflects both the broadening impact of past increases in interest rates and slower foreign demand. The subsequent pickup is driven by household spending as well as stronger exports and business investment in response to improving foreign demand.
Inflation Outlook
CPI inflation has been volatile in recent months, with a high of 4 percent in August. Higher interest rates are moderating inflation in many goods that people buy on credit, and this is spreading to services. Food inflation is easing from very high rates. However, in addition to elevated mortgage interest costs, inflation in rent and other housing costs remains high.
Monetary Policy
With clearer signs that monetary policy is moderating spending and relieving price pressures, the Governing Council has decided to hold the policy rate at five percent and to continue to normalize the bank’s balance sheet. However, the Governing Council is concerned that progress towards price stability is slow and inflationary risks have increased, and is prepared to raise the policy rate further if needed.
Commitment to Price Stability
The bank remains resolute in its commitment to restoring price stability for Canadians. The Governing Council wants to see downward momentum in core inflation, and continues to be focused on the balance between demand and supply in the economy, inflation expectations, wage growth, and corporate pricing behavior.
Key Statistics
- Global GDP growth: 2.9 percent (2023), 2.5 percent (2024), 3.0 percent (2025)
- Canadian economic growth: 1.2 percent (2023), 0.9 percent (2024), 2.5 percent (2025)
- CPI inflation: 3.5 percent (2024), 2.0 percent (2025)
What’s Next?
The Bank of Canada will continue to monitor the economy and adjust its monetary policy as needed to restore price stability.
Expert Analysis
Recommended from Editorial:
- "Look for ‘hawkish hold’ from Bank of Canada"
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By holding interest rates steady, the Bank of Canada is signaling that it remains committed to restoring price stability in the Canadian economy. However, with inflation risks increasing and core inflation showing little downward momentum, the bank may need to raise interest rates further if needed.
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