The Bank of Canada (BoC) announced on Wednesday that it is keeping the benchmark interest rate unchanged at 5% after the September policy meeting. This decision coincides with market expectations.
In its policy statement, the BoC has repeated that it remains concerned about the persistence of underlying inflationary pressure and has signaled that it is prepared to raise rates again if necessary.
Highlights of the BoC statement
“There has been little recent downward momentum in core inflation; recent CPI data indicates that inflationary pressures in Canada remain broad-based.”
“With the recent increase in gasoline prices, CPI inflation is expected to be higher in the near term before easing again.”
“We will continue to assess core inflation dynamics and the outlook for CPI inflation.”
“With core inflation measures still elevated, major central banks remain focused on restoring price stability.”
“We decided to keep rates at 5% given recent evidence that excess demand in the economy is waning, and given the lagged effects of monetary policy.”
“The Canadian economy has entered a period of slower growth, necessary to ease price pressures.”
“Canadian labor market stickiness has continued to ease gradually, but wage growth remains around 4-5%.”
“International oil prices are higher than expected in the July monetary policy report.”
Market Reaction to BoC Rate Decision
The USD/CAD pair has fallen towards 1.3600 in immediate reaction to the BoC’s monetary policy announcement, before quickly recovering above 1.3650.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
