Bank of Canada keeps key interest rate on hold — again

Bank of Canada left its benchmark interest rate unchanged on Wednesday, in keeping with expectations from economists.The decision to keep its key policy rate at 4.5 per cent in its second consecutive meeting comes after a year of rapid rate hikes aimed at taming inflation.

Read more: U.S. inflation cools in March – but is it enough for the Fed to pause rate hikes? The Bank of Canada said in January that it would adopt a pause in its rate increases as long as inflation continued to decline according to its forecast.But the central bank warned in a statement that it remains prepared to raise interest rates again “if needed” to bring inflation back down to its two per cent target.In a separate monetary policy report released alongside the rate decision Wednesday, the Bank of Canada said its forecast for inflation to cool to around three per cent by the middle of this year.The central bank also said inflation is now expected to slow to two per cent by the end of 2024 — it had previously said it would hit this target sometime next year.The annual rate of inflation has shown signs of cooling as of late, coming in at 5.2 per cent in February, down from highs of 8.1 per cent last summer.Most economists had expected the rate hold despite signs of a persistent economy and a tight labour market so far in 2023 raising the risks of inflation staying high for longer.But fears over recent banking turmoil in the United States and Europe have made other central banks around the world more cautious about their rate paths and the possibility of tipping global economies into recession.More to come.