Official Report on Bank of Canada’s Interest Rate Decision
The Bank of Canada maintained its benchmark policy rate at 1%, electing to preserve monetary policy continuity following a period of tightening measures.
Key Economic Indicators:
- Economic Growth: Activity remained subdued, with annual growth rates near historical lows. Population growth outpaced job creation, and employment levels were stable.
- Inflation Dynamics: Core inflation stood at 3.1%, slightly below the Bank’s 2% target. Price pressures were tempered by higher interest rates, which constrained spending in both durables and services sectors. Shelter-related costs continued to rise, while other housing components remained elevated.
** labor Markets:**
Job vacancies approached pre-pandemic levels, and employment growth slowed compared to population growth rates. Unemployment stood at 5.8%, indicating resilience in the labor market despite softening conditions.
Monetary Policy Outlook:
Members assessed that past rate hikes had effectively dampened economic activity and inflationary pressures. While inflation remained elevated, recent data suggested a narrowing gap, aligning with expectations for gradual decline. A further decline in core inflation was anticipated to solidify the target achievement.
Economic Forecasts:
Growth forecasts for the fourth quarter showed continued slow momentum, with no immediate signs of a shift toward sustained expansion. The focus now turns to assessing whether inflation trends will sustain alignment with policy objectives.
This report underscores the Bank’s commitment to maintaining monetary conditions conducive to long-term stability and ensuring gradual inflation reduction.
