Canada Interest Rate

The Bank of Canada held its key rate at 5% in April, as largely expected, and refrained from giving any hints on the start of rate cuts due to persistent upside risks to inflation. The central bank noted that price pressures have eased across a broad range of goods and services since the last meeting, but added that the uncertain macroeconomic backdrop and higher-than-expected commodity prices, including oil, prevent a smoother convergence of disinflation. BoC Governor Macklem added that although the latest data pointed to some progress in modering underlying inflation, the data is still not sufficient to confidently warrant looser monetary policy. Consequently, the BoC expects inflation to remain near the 3% level in the first half of this year before only reaching its target of 2% in 2025. In the meantime, recent data pointing to resilient global economic growth drove policymakers to consider stronger domestic output, with GDP set to expand by 1.5% this year and 2.2% in 2025.