Bank of Canada leaves rates unchanged, lifts growth forecast
The Bank of Canada left interest rates unchanged at 4.50% on Wednesday, as expected, and upgraded its growth forecast for this year.
The BOC said it expects consumer price inflation to fall quickly to around 3% in the middle of this year and then decline more gradually to its 2% target by the end of 2024.
"Recent data is reinforcing Governing Council’s confidence that inflation will continue to decline in the next few months," it said.
"However, getting inflation the rest of the way back to 2% 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 normalise. As it sets monetary policy, Governing Council will be particularly focused on these indicators, and the evolution of core inflation, to gauge the progress of CPI inflation back to target."
The bank said that overall, GDP growth is expected to be weak through the remainder of this year before strengthening gradually next year. It upgraded its growth estimate for this year to 1.4% from 1.0% in January and said it now expects the economy to grow by 1.3% in 2024 and 2.5% in 2025.
The BOC said it is still prepared to raise rates further if needed, to return inflation to its 2% target.
"The Bank remains resolute in its commitment to restoring price stability for Canadians," it said.